Does international expansion create shareholder value? Evidence from European multinational enterprises

This study investigates the impact of internationalisation on the stock market performance of multinational enterprises, using a panel of 1,527 European firms over the period 2004–2024. While international expansion is often regarded as a strategic route to enhance firm value, empirical evidence remains mixed. This paper contributes to the debate by examining how internal strategic decisions, sustainability practices, and governance mechanisms moderate the internationalisation–performance relationship. The analysis incorporates firm-level fixed effects and employs robust estimation techniques, including Propensity Score Matching and GMM, to address endogeneity concerns. Results show that internationalisation positively influences market valuation, reflecting investor confidence in firms that signal growth, diversification, and adaptability. The effect is stronger for firms with effective inventory management and active business portfolio restructuring. Moreover, ESG performance enhances, while ESG controversies diminish, the positive valuation effects of internationalisation. Audit committee strength and higher institutional ownership also reinforce this relationship, highlighting the role of governance in complex international operations. Findings are robust across alternative model specifications and crisis periods, including the Global Financial Crisis, COVID-19 pandemic, and Russia–Ukraine conflict. This study offers theoretical and practical insights by integrating institutional theory and the resource-based view, and by emphasising the strategic contingencies that shape market responses to global expansion.