JOURNAL OF MANAGEMENT POLICY AND PRACTICE
How do Foreign Firms Manage Their Exposure to United States Portfolio Flows?
Author(s): Matthew M. Wynter
Citation: Matthew M. Wynter, (2018)"How do Foreign Firms Manage Their Exposure to United States Portfolio Flows?," Journal of Management Policy and Practice, Vol. 19, Iss. 2, pp. 57-102
Article Type: Research paper
Publisher: North American Business Press
From 1990 to 2013, US portfolio flows to foreign stocks and bonds nearly quadrupled. Across 44 countries, I show that non-US firms with stock returns that are more sensitive to these cross-border flows are more likely to sell stocks and bonds, but display lower investment and employment growth rates. Using large natural and industrial disasters, I document that after deadly disasters occur, firms that are more sensitive to US flows are less likely to tap capital markets and tend to cut their real behaviors at higher rates, as would be expected if capital flight could potentially spill over to the real economy.