Corporate International Diversification: Evidence From Canada

This paper investigates the impact of corporate international diversification on the shareholders of Canadian firms. The results indicate that, within the context of Canada, multinationals outperform their purely domestic counterparts. Specifically, we find that the shareholders of Canadian multinationals earn significantly higher abnormal returns. This holds true despite the finding that these shareholders are also exposed to a higher degree of systematic risk. Further, these results indicate that both the abnormal returns and the degree of systematic risk are increasing functions of the degree of international involvement