Abstract Substantial amounts of British capital flowed to Latin America during the first era of globalization. Companies financed by this capital were typically headquartered in the United Kingdom, but operated thousands of miles away. This paper asks how this geographic separation between governance and business activities affected the valuation of these firms. We show that companies headquartered in London and operating in Latin America did not outperform British companies, but were riskier. We find that the location of the headquarters played a more important role than the location of operations. Stock prices tended to fluctuate in line with other equities based in the United Kingdom, suggesting that they were still regarded as being, at least partially, British companies.
Campbell et al. (Sun,) studied this question.