The Effects of the Governance Environment on the Choice of Investment Mode and the Strategic Implications

Li, Shaomin; Filer, Larry

doi:10.2139/ssrn.724234

Cited by 42 publications

(107 citation statements)

References 30 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…First, to adapt to the lower level of investor protection, market participants in regions with lower investor protection tend to enforce their contracts privately rather than publicly. Relationship‐based transactions facilitate the private enforcement of contracts (Allen, Qian and Qian, 2005; Li and Filer, 2007). In order to maintain their reputation and good relationship with other market participants, concentrated ownership is one important mechanism.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Finally, in a society with lower‐level trust of China, concentrated ownership improves shareholders' ability to make longer‐term commitments to key corporate stakeholders – e.g., suppliers and clients – in regions with a lower level of investor protection (Li and Filer, 2007). The concentrated ownership also facilitates the building of a good reputation, an alternative financing channel, and a governance mechanism for good legal protection of investors (Allen et al .…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

State Control, Legal Investor Protection, and Ownership Concentration: Evidence from China

Shi-nong

Yuan

2009

Corporate Governance

View full text Add to dashboard Cite

Manuscript Type: EmpiricalResearch Question/Issue: To control for the omitted-variables and aggregation biases problem existing in previous crosscountry studies, our paper investigates the relationship of ownership concentration and legal investor protection across regions and over time in one emerging economy, China, during the period 1992 to 2003. Moreover, this paper examines whether state control affects this relationship. Research Findings/Results: For state-controlled firms, we cannot find the typical inverse relationship between ownership concentration and legal investor protection documented by La Porta, Lopez-de-Silanes, Shleifer, and Vishny (1998), since state per se works as a substitute for formal legal investor protection in protecting property rights by exploiting political power. However, for non-state-controlled firms, the inverse relationship does hold. Theoretical Implications: Our findings suggest that the nature of the controlling shareholder should be taken into account when examining the relationship between ownership concentration and legal investor protection. Moreover, our findings give new insights, especially to the study on other emerging economies that share similar characteristics with China in terms of legal development and government control. Finally, the cross-region study within one country provides a new perspective on the research in this area. Practitioner Implications: First, to provide a level playing field for different types of investors, the state's dual role of controlling shareholder and political power holder should be separated. Second, it is important to build up a good legal system to protect investors in order for a country to develop its capital markets, especially for the development of the non-state sector.

show abstract

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

State Control, Legal Investor Protection, and Ownership Concentration: Evidence from China

Shi-nong

Yuan

2009

Corporate Governance

View full text Add to dashboard Cite

show abstract

“…Globerman and Shapiro (2003) show that countries with a more impartial and transparent legal system and better protection of property rights tend to attract more US FDI. A recent study by Li and Filer (2007) states that in countries with a poor governance environment, investors prefer direct investment to indirect (portfolio) investment because the former can be better protected by private means.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Healey et al location advantages such as institutional factors for the efficient utilization of core competencies (Globerman and Shapiro 2003;Li and Filer 2007).…”

Section: Botosan Andmentioning

confidence: 99%

See 1 more Smart Citation

An Empirical Analysis of the Impact of Corporate Transparency On Foreign Direct Investment

Seyoum

2009

Multinational Business Review

View full text Add to dashboard Cite

Access to this document was granted through an Emerald subscription provided by emerald-srm:463575 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.Abstract: This study tests for the relation between corporate transparency and foreign direct investment (FDI) using a sample of 118 countries. The study also develops a set of indicators to measure corporate transparency. The findings indicate support for the hypotheses that a) greater levels of corporate transparency are associated with higher levels of inward FDI flows, and b) corporate transparency has a greater impact on inward FDI in developing countries than developed countries.

show abstract

Attacked from Both Sides: A Dynamic Model of Multinational Corporations' Strategies for Protection of Their Property Rights

Bucheli

Kim

2015

Global Strategy Journal

View full text Add to dashboard Cite

Multinationals operating in site‐specific industries face two types of opportunistic behavior. If they vertically integrate, host governments have incentives to change existing legislation challenging the firms' property rights. If they do not, they can be held up by business partners or lose control over the production process. These conflicting problems are reflected in the contradictory assessment made by the obsolescing bargaining power and transaction costs economics theories. Drawing on property rights theory, we introduce political integration as a strategy to address the two conflicting problems. It involves the integration of the host country's polities within the multinational's structure to avoid government opportunism, while still benefiting from the advantages of vertical integration. However, this strategy can backfire after institutional changes in the host country.

show abstract

The Effects of the Governance Environment on the Choice of Investment Mode and the Strategic Implications

Cited by 42 publications

References 30 publications

State Control, Legal Investor Protection, and Ownership Concentration: Evidence from China

State Control, Legal Investor Protection, and Ownership Concentration: Evidence from China

An Empirical Analysis of the Impact of Corporate Transparency On Foreign Direct Investment

Attacked from Both Sides: A Dynamic Model of Multinational Corporations' Strategies for Protection of Their Property Rights

Contact Info

Product

Resources

About