Ownership and Control in Multinational Joint Ventures

In international joint ventures, where one of the partners is a multinational enterprise (MNE) and the other is a local firm that possesses some significant advantage in its market, there are sometimes issues of control (who is in charge of what) that may be reflected in the financial structure of the venture. In particular, it may be the case that the structure of equity is a signal of whether or not the distribution of control among partners has been efficiently achieved. This possibility seems to go against the intuition that equity, and capital structure should be irrelevant.