Theoretically, the effect of international business activity on firm value depends on ownership and capital structure. Companies may over-invest in international business activity because of agency problems or under-invest, if they are capital-rationed. This paper examines how these competing hypotheses fit a sample of 237 very large European and US companies over the period 1991-1997. The results indicate that internationalization may sometimes destroy value from a shareholder viewpoint and that financial leverage may have a negative effect on value creation by internationalization whereas the effects of ownership concentration on value gains from internationalization were found to depend on system effects. However, the magnitude of the effects is small, and the results were found to be sensitive to estimation methods.