Liability of Foreignness in Metals and Mining Companies in Brazil

Abstract

This research evaluates the liability of foreignness (LOF) in metals and mining companies in Brazil by comparing the financial performance of foreign and local firms. The study also tests if the increase in the psychic distance index (PDI) reduces the performance of foreign companies. We estimated panel data regression models for a sample of 78 companies (29 multinationals in Brazil). Even though the performance differences between mining foreign companies and local ones are not significant, there is evidence that foreign firms face LOF and we confirmed a negative relationship between PDI and the performance of foreign metals and mining companies.

Keywords:

• Liability of foreignness
• psychic distance
• mining and metallurgical industry
• mining and metals companies
• stakeholders

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data availability statement

The data that support the findings of this study are available from the corresponding author upon reasonable request.