Unearthing the Integral Determinants of Foreign Ownership Prevalence of Companies in Africa: Role of Country-level Governance

Foreign Ownership in Sub-Saharan Africa: Do Governance Structures Matter?

“…Thus, companies with predominant foreign holdings are expected to be more effective and efficient than those with fewer or no foreign shares [1]. The shape of the advancement of modern technologies and ideas is anticipated to be adopted by local corporate businesses with higher foreign investments [2,3]. The chance for developing countries and economies in transition to copy the foreign style of management is also a key rationale in luring investments from abroad [4].…”

“…Nevertheless, there seems to be aggressive competition by domestic corporate companies in attracting foreign ownerships in a globalized economy, and thus foreign investors recognize good country-level corporate governance as an unambiguous influencing key factor [3,[6][7][8]. Government establishments which consist of governance structures and enactments that are built on global laws and standards would enable developing economies to rationalize their corporate structures, which in turn could enhance the predominance of foreign ownership in their economies [9][10][11].…”

“…Government establishments which consist of governance structures and enactments that are built on global laws and standards would enable developing economies to rationalize their corporate structures, which in turn could enhance the predominance of foreign ownership in their economies [9][10][11]. Several studies have investigated the inclinations of conventional investors and how they are influenced by these economic factors [3,[12][13][14][15].…”

“…Economies that are characterized by weak governance establishments, inaccurate accountability systems, and the ineffective protection of investors put off foreigners from investing money in their corporate firms [3]. Consequently, foreign investors tend to invest in the firms of economies that are known for strong and effective governance establishments, which would help to guarantee accountability, transparency, the protection of investors, and many other benefits [7].…”

“…In our paper, we are interested in the way in which the predominance of foreign ownership is influenced by country-level governance structures, given that the disproportion across countries with regard to economic factors offers only a fragmentary explanation of the locational options that foreign investors had, and given that the efficiency and effectiveness of a country's governance establishment significantly impacted the investor's choices [3,9,16,17]. Our research will provide more comprehension on how the holdings of foreign investors in Sub-Saharan African economies are influenced by institutional establishments.…”