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has been cited by the following article:

• TITLE: International Diversification, Excessive Growth, and Corporate Governance

  AUTHORS: Mengyang Guo, Justin Yiqiang Jin, Mary Li Zhi Ma

  KEYWORDS: International Diversification, Segment Earnings Disclosure, Corporate Governance, Information Asymmetry

  JOURNAL NAME: Theoretical Economics Letters, Vol.9 No.7, October 11, 2019

  ABSTRACT: This study examines the relationship between international diversification and firms’ access to external capital to finance growth opportunities. We hypothesize that moral hazards, adverse selection, and home bias arise when firms expand across borders. These problems may hinder the portion of firm growth that is financed by external capital providers known to play a monitoring role. Using various measures of firms’ excessive growth and international diversification, we show that external capital providers do not view the international expansion of operations as value-enhancing activities. We also find that efforts of corporate governance (e.g., through higher levels of corporate governance and the disclosure of segment earnings) can be an effective strategy to alleviate external capital providers’ concerns and achieve higher growth rates through the expansion of international operations.