Dr. Zabihollah Rezaee Published in The Quarterly Journal of Economics and Finance
MEMPHIS, TN—July 15, 2019. Dr. Zabihollah Rezaee, Thompson-Hill Chair of Excellence and professor of Accountancy in the Fogelman College of Business and Economics at the University of Memphis recently published in the premier The Quarterly Journal of Economics and Finance titled “Corporate Diversification, Debt Maturity Structures and Firm Value: The Role of Geographic Segment Data.” This paper is authored together by professors Olibe (Kansas State University), Flagg (Texas A&M University) and Ott (Kansas State University).
In this paper, the authors investigate whether foreign and domestic assets of US firms are financed with borrowed funds (e.g., with short- and long-term debt maturity structures). Regression analysis documents a positive association between foreign assets and long-term debt, and a negative association between foreign assets and short-term debt. There are also opposite relations between long-term (negative relation) and short-term (positive relation) and domestic fixed assets. Further findings show that foreign assets are incrementally, positively associated with Tobin’s q, indicating that foreign investment is a successful path to higher equity value.
In the partition sample, variation in debt affects the pricing of foreign assets. Specifically, foreign assets of high debt-to-asset ratios are positively related to Tobin’s q, whereas the relation is less positive for medium debt-to-asset ratio firms and insignificant for low debt-to-asset ratios, implying that near-all equity firms do not trade at a discount.
The article may be accessed via the following link.
Rezaee, Z., Olibe, K., Flagg, J., and Ott, R., “Corporate Diversification, Debt Maturity Structures and Firm Value: The Role of Geographic Segment Data,” The Quarterly Review of Economics and Finance, May 2019.