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

Areneke, Geofry; Adegbite, Emmanuel; Tunyi, Abongeh A.

doi:10.1016/j.ibusrev.2022.101978

Cited by 34 publications

(29 citation statements)

References 130 publications

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“…The professional accomplishment and enhancing the appropriate record of business transactions as well as limiting the manager's opportunistic behavior of corporations can be achieved by incorporating a strong system of corporate governance within the corporations (Al-Gamrh et al, 2020;Areneke et al, 2022). While weak corporate governance system may lead to misconduct in the business affairs, corruption, and earning misconduct (Leventis & Dimitropoulos, 2012).…”

Section: Introductionmentioning

confidence: 99%

An Analysis of Ownership Structure and Corporate Governance Indicators on Discretionary Accruals

Asif

Haq

Waseem

2023

JEBV

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The debate on the impact of ownership structure and corporate governance on earnings management remains uncertain. This study explored the impact of ownership structure and corporate governance on earnings management with the use of the ordinary least square estimation method in the context of Pakistan. This study utilized the famous modified John’s model (1995) for estimating discretional accruals which are used as a proxy for earning management. Our results indicated that institutional investors play a significant role in constraining earnings management practices. The number of members on the board of directors, and ownership concentration influence discretionary accruals. Among the control variables, we found that more profitable firms, are growing, or have higher leverage actively manage their earnings, while earnings management decreases with the age of the firm. Results from this study revealed around the relationship between ownership structure and corporate governance code on earnings management was diverse. Larger investment by institutions decreases ownership concentration, removes block holding and consequently, it would decrease earning management. The result revealed that board independence has a positive impact on earning management. These results suggested that the board did not act as a monitoring tool to reduce the manipulation of the accounting information.

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Section: Introductionmentioning

confidence: 99%

An Analysis of Ownership Structure and Corporate Governance Indicators on Discretionary Accruals

Asif

Haq

Waseem

2023

JEBV

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“…The primary determinant is foreign investors have a more sensitive tendency toward corporate governance issues, so they need complete information to support the investment decisions made (Chen et al, 2010;Yildiz, 2021). Furthermore, because of limited surveillance, foreign investors are more like corporates in countries with a high enforcement level, thus making foreign investors feel safer investing (Leuz, Lins, dan Warnock 2009) Resoure: (KSEI, 2021) So far, the corporate ownership structure changes more explained with agency theory (Areneke et al, 2022;Yildiz, 2021). Based on agency theory, a conflict of interest arises between the agent and the principal, where the principal expects that the agent can carry out what is expected by the principal (Jensen, 1986).…”

Section: Introductionmentioning

confidence: 99%

“…This is because foreign investors prioritize long-term goals thereby encouraging companies to implement good corporate governance (Leuz et al, 2010;Pranesti & Kusuma, 2022;Tunay & Yüksel, 2017;Xu et al, 2022). As it was said by Areneke et al, (2022), foreign investors are capable to improve corporate governance in developing country market environments. This supports the agency theory that corporate shows a commitment by reducing agency cost and maximizing company value by attracting cheaper sources (Driffield et al, 2013;Jensen, 1986;Kim & Mahoney, 2005).…”

Section: Introductionmentioning

confidence: 99%

“…The research is trying to complete the gap of research because anecdotal evidence about the incident decline of a foreign ownership ratio in Indonesia which haven't been researched by researchers previously, especially in Indonesia (Driffield dkk., 2016;Rhee & Wang, 2009;Shaban & James, 2018). Developing literature about foreign ownership structure decline in developing countries tends to be less researched (Areneke et al, 2022;Driffield et al, 2016;Su, 2017;Yildiz, 2021). Therefore, the research is trying to give a different view covered by the property right theory.…”

Section: Introductionmentioning

confidence: 99%

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Corporate governance, political connection, and foreign ownership control: The property rights theory perspective

Pranesti

Fajar²,

Larasati³

et al. 2023

JIFA

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Over time, the reduction in foreign ownership in Indonesia has prompted questions about its causes. The country is still perceived to have low corporate governance standards and a high level of political connections. The aim of this study is to investigate whether corporate governance and political connections have an impact on foreign ownership. The study utilized manufacturing company data from 2018 to 2021, comprising 48 companies with 192 observations. The findings of the study indicate that foreign investors tend to decrease their investment in companies with strong corporate governance. The study reveals that a firm with robust corporate governance becomes an attractive target for local investors to acquire ownership. The findings provide evidence of a decrease in the proportion of foreign investors in such companies. Instead, foreign investors continue to view companies with political connections as potential concern for surveillance. This study uses another argument to explain how the structure of foreign ownership in Indonesia uses the property right theory. Policy-making authorities can make policies to support corporate governance arrangements and support to reduce the level of corruption so as to support the investment climate in Indonesia. This research can be used as a new insight to understand how the investment climate is, but has not considered aspects related to environmental and social issues

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“…With FDI, the investor, who is usually not a resident of the host country, aims at acquiring a lasting interest and control in an industry (Ajide et al, 2022). When FDI involves transferring the capital from a source country to a host country, the transfer should control substantial equity shareholdings (Areneke et al, 2022), and some assets should be shifted into the host country (Padmanabhan et al, 2020). FDI can be classified into different types depending on the investor/the source country or the host country's perspectives (Yoo and Reimann, 2017).…”

Section: Introductionmentioning

confidence: 99%

Drivers of foreign direct investment: new evidence from West African regions

Korsah¹,

Amanamah²,

Gyimah³

2022

JBSED

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PurposeThis paper aims to empirically investigate the factors attracting foreign direct investment (FDI) inflows into emerging economies.Design/methodology/approachThis study uses secondary data from the World Bank and the Global State of Democracy Indices of 16 West African countries (WACs) over the period from 1989 to 2018. Fixed- and random-effects econometric regression models are used to assess the nexus between 12 macroeconomic indicators (including political risk and cultural factors) and FDI inflows into WACs.FindingsThe critical drivers of FDI inflows into WACs are the richness of natural resources, market size or gross domestic product (GDP), imports and exports of goods and services, trade openness and the currency's strength as measured by the exchange rate. The result also reveals that French-speaking countries attract more FDI than other English-speaking countries. The previously cited determinants of FDI, such as infrastructural development, inflation, tax and political stability, are insignificant in determining FDI inflows into WACs.Originality/valueThis study uncovers the critical drivers explaining the FDI inflows into WACs, where FDI accounts for 39% of external finance. The study's contribution is that Francophone WACs attract more FDI than Anglophone WACs. The most important drivers of FDI are abundant natural resources, GDP, imports, exports, trade openness and exchange rate.

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

Cited by 34 publications

References 130 publications

An Analysis of Ownership Structure and Corporate Governance Indicators on Discretionary Accruals

An Analysis of Ownership Structure and Corporate Governance Indicators on Discretionary Accruals

Corporate governance, political connection, and foreign ownership control: The property rights theory perspective

Drivers of foreign direct investment: new evidence from West African regions

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