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

Geofry Areneke, Emmanuel Adegbite, Tunyi Tunyi Abongeh Orcid Logo

International Business Review, Volume: 31, Issue: 5, Start page: 101978

Swansea University Author: Tunyi Tunyi Abongeh Orcid Logo

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DOI (Published version): 10.1016/j.ibusrev.2022.101978

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 2011–20...

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Published in: International Business Review
ISSN: 0969-5931
Published: Elsevier BV 2022
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URI: https://cronfa.swan.ac.uk/Record/cronfa65102
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.
Keywords: Corporate governance, Foreign institutional investors, Cultural distance, Legal system, Practice transfer, Emerging markets, Nigeria
College: Faculty of Humanities and Social Sciences
Issue: 5
Start Page: 101978

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