PE is considered to represent“political risk” (PR) for the MNC. Kesternich and Schnitzer (2010)consider three PRs,namely:(1) outright expropriation representing a classical form of political risk when the foreign country government takes theMNC's property without compensation (Buckley, 2003;Hill, 1998).(2) creeping expropriation“negatively affects the expected returns on the investment project (e.g. exchange rate restrictions, failure to enforce or respect the agreed property and contract rights)”(Kesternich and Schnitzer, 2010, p. 211).(3) confiscatory taxation “directly affects the MNC's profits (e.g. corruption, discriminatory taxation)” (Kesternich andSchnitzer, 2010, p. 212)
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