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Multinational Corporations vs. Domestic Corporations: Financial Performance and Characteristics

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The analysis in this paper is composed of two segments. First, the financial performance of a sample of multinational corporations (MNCs) is compared with that derived for a control group of domestic corporations (DMCs) using market-based performance measures. Then, the paper presents a comparison of selected financial characteristics of the firms in the two groups. The results suggest the DMCs appear to have a significantly superior risk-adjusted market-based performance, are significantly less capitalized, and have higher total risk as well as higher systematic risk. The fact that MNCs are substantially larger than DMCs is not found to be a significant factor in explaining the observed difference between the two groups' performance.

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*Allen Michel is Associate Professor of Finance at Boston University's School of Management. He received his Ph.D. from Cornell, M.A. from Yale, and B.S. from Carnegie-Mellon. He specializes in corporate financial decisions and mergers and acquisitions. In addition, he is president of Boston Management Group.

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Michel, A., Shaked, I. Multinational Corporations vs. Domestic Corporations: Financial Performance and Characteristics. J Int Bus Stud 17, 89–100 (1986).

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