The current study examined the impact of multinationality and solvency on the profitability of multinational firms. In this study, a panel framework of forty-five FMCG has drawn from 2005 to 2017. This study adopted the dynamic generalized method of moments (GMM) and used the simultaneous equation method to cope with endogeneity issues and robustness result. Most of studies have formulated on large heterogeneous firms in literature and contained dummy variables, which are also causes of endogeneity. Hence in this study, large likely homogeneous firms have been used as samples. The results of this study suggest that solvency has a profound effect on performance. In this study, FMCGs showed inverse influence of multinationality on profitability. We concluded that the large FMCGs are at an optimum level of multinationality. So, if they would further increase cross-border investments, they could decrease their return on a total investment of assets.
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