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The impact of the economic crisis on the financial performance of multinational corporations

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  • Zhao, Xin
  • Jiang, Xianling
  • Li, Zhaoyang

Abstract

We investigate the impact of the recent economic crisis on the financial performance of multinational corporations. The results show that multinational corporations in our study sample have increased more than 1.9 times (from $529.63million to $1544.82million) in their sales in Asia, and have increased 13.7 times (from $16.88million to $247.74million) in their sales in China from 1999 to 2012. Moreover, we find that the increase in Asian/Chinese percentage sales results in higher accounting performance after the crisis, in contrast to domestic firms. This result is robust and controls for firm and industry characteristics, and possible endogeneity issues. Finally, new entrant firms to Asia and China experienced an increase in ROA, while their matched firms and domestic firms did not. All these results indicate that firms which have taken aggressive actions (e.g., by strategically relocating their sales to other parts of the world such as Asia/China) experienced less adverse effects from the crisis compared with their domestic counterparts.

Suggested Citation

  • Zhao, Xin & Jiang, Xianling & Li, Zhaoyang, 2015. "The impact of the economic crisis on the financial performance of multinational corporations," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 55-68.
    • Handle: RePEc:eee:reveco:v:37:y:2015:i:c:p:55-68
    DOI: 10.1016/j.iref.2014.11.013
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    2. Lori M. Thanos & Sylvia D. Clark, 2017. "A Qualitative Exploration of Culturally-Pluralistic Segmentation among Millennials," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 9(4), pages 1-14, August.
    3. Natalia G. Vovchenko & Olga B. Ivanova & Elena D. Kostoglodova & Marina O. Otrishko & Olga S. Dzhu, 2016. "Innovations and Fighting Global Economic Problems," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 10(4), December.
    4. Au Yong, Hue Hwa & Laing, Elaine, 2021. "Stock market reaction to COVID-19: Evidence from U.S. Firms’ International exposure," International Review of Financial Analysis, Elsevier, vol. 76(C).
    5. Rasa Kanapickiene & Deimante Teresiene & Daiva Budriene & Greta Keliuotytė-Staniulėnienė & Jekaterina Kartasova, 2020. "The Impact Of Covid-19 On European Financial Markets And Economic Sentiment," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 14(1), pages 144-163.
    6. Saleh, Emad Alchikh, 2023. "The effects of economic and financial crises on FDI: A literature review," Journal of Business Research, Elsevier, vol. 161(C).

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    More about this item

    Keywords

    Economic crisis; Percentage sale; Multinational corporations;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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