Political risk and adjusted present value
作者:
YUEHH. CHEN,
WINSTONT. LIN,
期刊:
International Journal of Systems Science
(Taylor Available online 1994)
卷期:
Volume 25,
issue 12
页码: 2207-2220
ISSN:0020-7721
年代: 1994
DOI:10.1080/00207729408949345
出版商: Taylor & Francis Group
数据来源: Taylor
摘要:
This paper addresses three interrelated issues: a comparative analysis of the political risks for foreign direct investments in forty-nine countries located throughout the world; an adjusted present value procedure that incorporates political risk; and an application of the adjusted present value procedure to a numerical example in a sensitivity analysis. The comparative analysis relies on the statistical methods of mutliple regression analysis and discriminant analysis. The multiple regression models are estimated by the probit analysis procedure, whereas the discriminant analysis models are a four-group problem. Both methods give Switzerland the country least politically risky, followed by the United States; Iran ranks as the worst. Such a rating is essential for multinational corporations selecting countries for direct investment. The article then investigates how to make use of the adjusted present value and sensitivity analysis techniques to manage against political risk and evaluate overseas direct investments as well as to select countries.
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