What Causes the Divestment of Multinational Companies in China? A Subsidiary Perspective

Abstract

This paper examines the causes of MNCs’ divestments in China. The MNCs’ profitability, market shares and productivities are negatively related to the possibility of divestment, while the MNCs’ debts are positively related to the possibility that foreign investments are divested. These results suggest that divestments are affected by MNCs’ performances, and their performances are endogenous shocks for divestment.