Operational Flexibility and Market Valuation of Earnings  

Oleh:

Tang, Charles Y. ; Tikoo, Surinder

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Strategic Management Journal vol. 20 no. 8 (1999), page 749-762.
Topik: market valuation; operational flexibility; multinational structure; earnings response coefficient; earnings valuation; international

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: SS30.4 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This paper examines the association between the stock returns and accounting earnings of firms that have different levels of operational flexibility. Operational flexibility is a firm's ability to respond profitability to environmental fluctuations by shifting factors of production within a multi national network of subsidiaries. The geographic breadth and depth of a firm's multi national network are used as indicators of operational flexibility. We find a significantly greater coefficient relating stock returns and accounting earnings for multi national firms that operate in many countries, but limit their concentration in any one foreign country, than for other multi national firms or domestic firms. This coefficient is significantly smaller for multi national firm whose foreign subsidiaries are highly concentrated in a few countries. When all multi national firms are pooled together, we find their earnings - return association does not differ from that of domestic firms.

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