Investor Benefits from Corporate International Diversification

Abstract

This study focuses on the risk-return characteristics of investments in the common stocks of U.S.–based multinational corporations (MNCs) and U.S. national corporations (NATLs). Findings follow from a comparison of the risk-adjusted performance of MNCs and NATLs using the framework of the capital asset pricing model (CAPM). Results of this comparison challenge assertions of earlier writers that marginal benefits or advantages accrue from investments in MNCs as compared to NATLs.