A Market Performance Comparison of U.S. Firms Active in Domestic, Developed and Developing Countries

Abstract

Direct foreign investment (DFI) may benefit investors through superior cash flows or lower risk relative to purely domestic firms. This paper considers three groups of U.S. firms: those without significant international operations, those with international operations in developed countries, and those with international operations in developing countries. After performing risk-return performance analysis on the three groups, the findings show developing country DFI results in inferior performance, but that there are no statistically significant differences in market performance among the three.