Essays on the corporate capital budgeting decisions of multinational enterprises

It is unclear theoretically whether multinational enterprises or purely domestic enterprises make more effective capital budgeting decisions. This is an important question given the role that multinationals play in allocating capital globally. I examine this question empirically using the deviation of a firm's estimated marginal Tobin's q from an appropriate benchmark as a reverse proxy for effective resource allocation. In Chapter One, I find that more effective capital budgeting is associated with multinationality. The result stems from multinational enterprises' exercising greater restraint on over-investment, but is not due to looser liquidity constraints.; In Chapter Two, I examine whether, and how, effective capital budgeting decisions are associated with a firm's corporate governance regime. I find that effective capital budgeting decisions are associated with independent, staggered boards. In addition, more effective capital budgeting decisions are associated with insider ownership among firms that over-invest, and less effective capital budgeting decisions are associated with institutional ownership among firms that under-invest. Even after controlling for corporate governance, the efficacy of corporate capital budgeting decisions remains strongly associated with multinationality.; The aim of the third chapter is to examine whether the quality of a multinational enterprise's capital budgeting decisions could be systematically related to the locations in which it operates. To the extent that a multinational firm invests in multiple locations and subjects itself to each of these countries' monitoring devices, the firm might be pressed to make more effective capital budgeting decisions. Moreover, because multinationals are more "footloose", they may be more successful than are purely domestic firms at resisting pressures from special interest groups or governments to adopt practices that are not consistent with shareholder wealth maximization. I find that firms make more effective capital budgeting decisions when they invest in countries with strong capital markets, which is consistent with the monitoring hypothesis; and in countries with weak legal systems, which is consistent with the bargaining hypothesis. These results do not hold for firms that over-invest. Moreover, more effective capital budgeting remains associated with minimal and widespread multinationality.; All results are robust to controls for firm and industry characteristics.