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Structuring International Cooperative Ventures

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  • Thomas H. Noe
  • Michael J. Rebello
  • Milind M. Shrikhande

Abstract

We examine the effect of bargaining power and informational asymmetry on the design of international cooperative ventures in the presence of restrictions on equity participation and investment. When the bargaining advantage rests with the multinational, equity participation restrictions can increase the profits to domestic firms and encourage suboptimal investment policies. Overinvestment occurs when the multinational's bargaining advantage is reinforced by an informational advantage, while underinvestment occurs when the domestic firm possesses the informational advantage. In contrast, when the bargaining advantage rests with the domestic firm, equity participation restrictions do not affect investment levels. Copyright 2002, Oxford University Press.

Suggested Citation

  • Thomas H. Noe & Michael J. Rebello & Milind M. Shrikhande, 2002. "Structuring International Cooperative Ventures," The Review of Financial Studies, Society for Financial Studies, vol. 15(4), pages 1251-1282.
    • Handle: RePEc:oup:rfinst:v:15:y:2002:i:4:p:1251-1282
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    Cited by:

    1. Marco Marinucci, 2009. "Optimal ownership in joint ventures with contributions of asymmetric partners," Journal of Economics, Springer, vol. 97(2), pages 141-163, June.
    2. Amrouche, Nawel & Yan, Ruiliang, 2013. "Can a weak retailer benefit from manufacturer-dominant retailer alliance?," Journal of Retailing and Consumer Services, Elsevier, vol. 20(1), pages 34-42.
    3. Melanie Zhang & Steven Devaney & Anupam Nanda, 2018. "Strategic Alliance and Submarket Choices of Commercial Real Estate Investors – A Multinomial Approach," ERES eres2018_210, European Real Estate Society (ERES).
    4. Rodri­guez, Eric, 2008. "Cooperative ventures in emerging economies," Journal of Business Research, Elsevier, vol. 61(6), pages 640-647, June.

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