Foreign divestment and insolvency risk: evidence from Nordic MNEs
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https://creativecommons.org/licenses/by/4.0/
Lataukset21
Pysyvä osoite
Kuvaus
© Arshed Iqbal, Jamshed Iqbal and Arto Ojala. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and noncommercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/
Purpose
This study aims to explore how foreign divestment (FD) affects the insolvency risk of parent firms and examines the moderating role of corporate social responsibility (CSR) in this relationship, an underexplored but critical issue in international business. It focuses on how resource losses from divestment destabilize parent firm solvency, offering insights into the financial vulnerabilities of multinational enterprises (MNEs).
Design/methodology/approach
Grounded in the resource-based view (RBV) and foreign divestment literature, this study analyzes a longitudinal dataset of 119 publicly listed Nordic MNEs (Finland, Sweden, Norway and Denmark), spanning 667 firm-year observations over 1992–2019. Insolvency risk is measured using Merton’s distance to default (DD) and credit default swap (CDS) spreads, with data from the Credit Research Initiative (CRI), Orbis and Refinitiv Eikon. For the CSR moderation analysis, a sub-sample from 2003 onward is used.
Findings
Foreign divestment is positively associated with higher insolvency risk, reflecting the financial strain from strategic asset loss or reallocation. Moreover, parent firms with stronger CSR engagement face greater insolvency risk during divestments.
Originality/value
Integrating RBV and CSR perspectives, this study provides a nuanced view of the financial and strategic consequences of foreign divestment. It offers actionable insights for MNEs managing divestments in volatile markets and underscores CSR’s complex role in mitigating or amplifying financial distress.
Emojulkaisu
ISBN
ISSN
2054-1686
1525-383X
1525-383X
Aihealue
Kausijulkaisu
Multinational business review
OKM-julkaisutyyppi
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä (vertaisarvioitu)