SDI 2020 Scholar Profiles

photo - Kai SternKai Stern is a Ph.D. candidate in Political Science at the University of North Carolina at Chapel Hill, where he received his master’s degree in 2018. His research interests lie at the intersection of international political economy and strategic management. In his dissertation, he explores the effects of supranational and subnational governance on firm strategy and performance.

Project: Bilateral Investment Treaty Violations and Shareholder Valuation

How do investor-state disputes affect shareholder valuations of firms? Since the 1970s, governments around the world have ratified thousands of bilateral investment treaties. These treaties reassure foreign investors that host governments will refrain from expropriation – a prominent risk multinationals face when investing abroad – in part because they almost invariably contain investor-state dispute settlement (ISDS) clauses. ISDS allows firms to sue host governments over treaty breaches outside of the domestic legal system. Firms have taken advantage of this mechanism in over 800 instances since 1987. This project will examine the consequences of investor-state disputes for multinational firms’ valuations. While scholars have routinely considered the effects of expropriation (often operationalized via ISDS cases) for firm investment and divestiture, research has generally overlooked the effects expropriation may have for actors other than firm managers. This project expands theoretically and empirically on the current literature by considering 1) the consequences of expropriation for shareholder evaluations of multinationals, and 2) how the process of launching an investor-state dispute may generate divergent shareholder responses based on the type of expropriation claim.

SDI Mentor: Heather Berry