Abstract
Most of the previous studies have concentrated on the working
of multinationals operating in advanced countries like USA,
UK and Japan ignoring emerging economies like Pakistan.
This study examines the corporate policies of multinational
firms operating in Pakistan and comparing with the policies
followed by domestic firms. The study also investigates the
variation in financial performance between domestic and
multinational firms because of their corporate policies. For
testing the hypotheses and other statistics, we employed
correlation, ratio and regression analyses techniques using 10
years (2004-2013) secondary data of 153 manufacturing firms
including both domestic and multinationals listed on Pakistan
Stock Exchange. The results indicate that the performance of
multinational firms is better than domestic firms primarily
because of investment diversification indicating an effective
role of location in determining firms’ performance due to
variations in their corporate policies related to working capital
and corporate governance. This interface between investment
diversification and firms’ profitability are more serious in face
of unpredictable oil and commodity prices across the country
ultimately drastically influencing the national economy.
Said Shah, SAF Hasnu. (2017) The impact of investment diversification on firms’ performance: A comparison of domestic and multinational firms operating in Pakistan, Paradigms , Vol 11, Issue 1.
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