Transfer of corporate governance practices into weak emerging market environments by foreign institutional investors

Areneke, Geofry, Adegbite, Emmanuel, and Tunyi, Abongeh (2022) Transfer of corporate governance practices into weak emerging market environments by foreign institutional investors. International Business Review, 31 (5). 101978.

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Abstract

We advance the practice transfer theorising of corporate governance (CG) by developing a framework that uncovers how foreign institutional investors (FIIs) improve on CG practices of firms in weak institutional environments. Using hand-collected data for 85 listed Nigerian firms covering the 2011–2016 period, we show that FIIs bypass the weak regulatory environment in emerging markets by transferring good CG standards to host countries. Furthermore, FIIs’ ability to enhance the CG quality of firms in such environments is moderated by their home country's legal system, with FIIs from countries with strong legal enforcement having an enhanced ability to improve CG practices of firms in weak institutional environments. However, cultural differences between the FIIs’ home and host countries negatively moderate this relationship. Our results are robust to the choice of estimation technique and various sources of endogeneity.

Item ID: 73567
Item Type: Article (Research - C1)
ISSN: 1873-6149
Keywords: Corporate governance, Cultural distance, Emerging markets, Foreign institutional investors, Legal system, Nigeria, Practice transfer
Copyright Information: © 2022 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Date Deposited: 27 Sep 2022 23:57
FoR Codes: 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3507 Strategy, management and organisational behaviour > 350701 Corporate governance @ 100%
SEO Codes: 13 CULTURE AND SOCIETY > 1303 Ethics > 130302 Business ethics @ 100%
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