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.

---

Definitions:

Cerebral Hemispheres

The two halves of the brain, each controlling different functions and processes, with the left hemisphere typically managing logic and language, and the right, creativity and spatial abilities.

Spinal Nerves

Nerves that originate from the spinal cord and branch out to various parts of the body, transmitting signals between the brain and the rest of the body.

Sensory Fibers

Nerve fibers that transmit sensory information from the body to the central nervous system.

Motor Fibers

Nerve fibers that transmit impulses from the brain or spinal cord to muscles or glands, orchestrating their movement or activity.