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Influence of Exchange Rate Fluctuations and Credit Supply on Dividend Repatriation Policy of U.S. Multinational Corporations

Author

Listed:
  • Muhammad Tahir

    (School of Management, Universiti Sains Malaysia and University of Turbat, Pakistan)

  • Haslindar Ibrahim

    (School of Management, Universiti Sains Malaysia, Malaysia)

  • Abdul Hadi Zulkafli

    (School of Management, Universiti Sains Malaysia, Malaysia)

  • Muhammad Mushtaq

    (Graduate School of Business, Universiti Sains Malaysia and University of Turbat, Pakistan)

Abstract

This study aims to examine the effect of exchange rate fluctuations and credit supply on the dividend repatriation policy of foreign subsidiaries of U.S. multinational corporations (MNCs) around the world. The difference generalised method of moments (GMM) estimator was applied to estimate the dynamic dividend repatriation model. The results suggest that the appreciation of host-country currency against the USD leads to higher dividend repatriation by the foreign subsidiaries of U.S. MNCs. Moreover, results reveal that higher availability of private credit in the host country results in lower dividend repatriation by the U.S. MNCs’ foreign subsidiaries.

Suggested Citation

  • Muhammad Tahir & Haslindar Ibrahim & Abdul Hadi Zulkafli & Muhammad Mushtaq, 2020. "Influence of Exchange Rate Fluctuations and Credit Supply on Dividend Repatriation Policy of U.S. Multinational Corporations," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(special i), pages 267-290.
    • Handle: RePEc:cbk:journl:v:9:y:2020:i:si:p:267-290
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    2. Eduardo C. Oliveira & Michele N. Juca, 2021. "Multinational Dividend Policies: A Systematic Literature Review to Future," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 442-465.
    3. Tahir, Muhammad & Ibrahim, Haslindar & Zulkafli, Abdul Hadi & Mushtaq, Muhammad, 2020. "Corruption, national culture, law and dividend repatriation policy," Journal of Multinational Financial Management, Elsevier, vol. 57.
    4. Le Dinh Hac & Dinh Tran Ngoc Huy & Nguyen Ngoc Thach & Bui Minh Chuyen & Pham Thi Hong Nhung & Tran Duc Thang & Tran Tuan Anh, 2021. "Enhancing risk management culture for sustainable growth of Asia commercial bank -ACB in Vietnam under mixed effects of macro factors," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(3), pages 291-307, March.

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    More about this item

    Keywords

    Exchange rate fluctuations; Credit supply; Dividend repatriation policy; Generalised method of moments; Multinational corporations;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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