Foreign Equity Investment Restrictions and Shareholder Wealth Maximization / Rene M. Stulz, Walter Wasserfallen.

Format:

Book

Author/Creator:

Stulz, Rene M.

Contributor:

National Bureau of Economic Research.

Wasserfallen, Walter.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4217.

NBER working paper series no. w4217

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

This paper provides a theory of foreign equity investment restrictions. In a setting where the demand function for domestic shares differs between domestic and foreign investors, domestic entrepreneurs can maximize firm value by discriminating between domestic and foreign investors. The empirical implications of this theory are supported by evidence from Switzerland. In contrast to mean-variance asset pricing models, the model correctly predicts that the relaxation of foreign equity investment restrictions decreases the value of shares available to foreign investors.

Notes:

Print version record

November 1992.