Despite the Theoretical Elegance of This Hypothesis, Empirical Studies Have

question 62

Multiple Choice

Despite the theoretical elegance of this hypothesis, empirical studies have come to the opposite conclusion. Despite the favorable effect of international diversification of cash flows, bankruptcy risk was only about the same for MNEs as for domestic firms. However, MNEs faced higher costs for each of the following EXCEPT:

• A) agency costs.
• B) political risk.
• C) asymmetric information.
• D) In fact, each of these costs were higher for the MNE than for the domestic firm.

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Definitions:

Machiavellianism

A personality trait characterized by a cynical disregard for morality and a focus on self-interest and personal gain, often at the expense of others.

Emotionally Detached

A state of being disengaged or disconnected from emotional experiences, sometimes as a protective or coping mechanism.

High-Mach Personality

A trait characterized by manipulation and exploitation of others, a cynical view of human nature, and a focus on personal gain often without regard for ethical considerations.

Self-Monitoring

The practice of observing and regulating one's own behavior and performance, often to align with standards or goals.