Corporate ownership and the theory of the multinational enterprise

This paper makes a contribution to the theory of the multinational enterprise (MNE) and, in particular, to why firms undertake foreign direct investment (FDI) rather than alternative strategies. We argue that FDI and its strategic alternatives involve different patterns of costs and returns over time, and hence different levels of risk and uncertainty. Traditional theories of the MNE conceptualize the firm as a risk-neutral decision-making entity with short-term efficiency objectives, and hence do not take these issues into account. This may be reasonable for firms with passive professional managers and widely-dispersed shareholders, operating in countries with the Anglo-American system of corporate governance. But many firms operate under quite different systems of corporate governance where concentrated shareholdings are commonplace and markets for corporate control are weak or non-existent. In these cases, shareholders exert considerable influence on all aspects of firm strategy including FDI. Furthermore, different groups of shareholders (State, family, institutions) are likely to have different objectives, different attitudes towards risk, and different decision-making time horizons. We thus suggest that the traditional theories of the MNE need to be extended to embrace consideration of corporate ownership (and other governance dimensions).     

Effects of Foreign Institutional Ownership on Foreign Bank Lending: Some Evidence for Emerging Markets

Despite the large literature on developed countries, little is known about the interactions between corporate governance, foreign ownership, and foreign bank lending in developing countries. Using data from five Latin American countries from 2001 to 2008, we provide one of the first pieces of evidence of how foreign ownership affects the loan cost of borrowers in emerging markets. We find that in terms of foreign bank lending, the cost of debt financing is significantly higher for firms whose largest shareholder is a foreign institutional one. The results support the hypothesis that because of potential agency conflicts between shareholders and creditors, having block institutional shareholders tend to increase the borrowers’ debt burden. There is further evidence supporting this agency conflict hypothesis as we find that the effects of large institutional shareholders on borrowing costs become larger (smaller) when the conflicts are aggravated (mitigated).     

The institutional determinants of private equity involvement in business groups—The case of Africa

This study examines the governance attributes of post-IPO (initial public offering) retained ownership of private equity in business group constituent firms in contrast to their unaffiliated counterparts, in 202 newly listed firms in 22 emerging African economies. We adopt an actor centered institutional-theoretic perspective in rationalizing institutional voids and the advantages of maintained governance by both business angels (BA) and venture capital (VC) private equity. Our findings reveal private equity retain higher post-IPO ownership in business group constituents compared to unaffiliated firms and that this is inversely moderated in the context of improving institutional quality – where this is particularly strong in case of foreign VC as opposed to domestic VC or BA. Our result adds to the literature on multifocal corporate governance mechanisms and the institutional determinants of private equity investment.     

Foreign ownership mode,executive compensation structure,and corporate governance: Has the literature missed an important link? Evidence from Taiwanese firms

We propose an alternate context-based extension to the agency theory-grounded explanation of foreign ownership mode choices proposed in the literature. Using a sample of Taiwanese firms investing in the greater China region over the 2001–2009 period, we show that both economic and non-economic factors influence the choice of foreign ownership mode. In addition, we document that higher institutional ownership percentages motivate Taiwanese firms to select shared ownership in the greater China region. Further, no long term compensation mix/ownership structure link is found. These findings run counter to a theory provided for foreign ownership mode choices of US based firms. Our findings provide support for the validity of stewardship and social capital theory, but not financial incentives-based agency theory, for Taiwanese firms investing in the greater China region.     

Institutional unpredictability and foreign exit−reentry dynamics: The moderating role of foreign ownership

We extend the internationalization process literature by theorizing how institutional unpredictability and its changes can affect the foreign exit?reentry process and how the multidimensionality of foreign ownership can alter these impacts as a firm's conduit to different foreign countries. Drawing on the dynamic institution-based view, we examine a process whereby firms exit and reenter foreign countries in response to institutional dynamism. By distinguishing foreign shareholders from host and nonhost foreign countries, we identify the negative moderation effects of host-country foreign ownership but not nonhost foreign ownership. Our study, therefore, contributes an integrative framework to the de- and re- internationalization research.     

数字金融的公司治理效应--基于非家族股东治理视角

非家族股东治理能够有效助力家族企业实现可持续发展与现代化转型的目标,因而提升非家族股东治理水平具有重要意义。数字金融作为传统金融发展模式的重要创新,能够实现“金融服务实体经济”的目标,促使非家族股东积极参与家族企业治理。基于此,本文以代理理论与社会情感财富理论为基础,探讨了数字金融对非家族股东治理的影响。实证检验发现,随着数字金融的发展,非家族股东治理水平不断提升。其作用机制在于,数字金融能够通过缓解代理冲突、弱化家族控制与强化传承意愿,提升非家族股东治理水平。拓展性分析发现,对于非创业型、融资约束较强、位于金融监管程度较强地区的家族企业来说,数字金融对非家族股东治理的积极效应更显著;数字金融对异质性非家族股东制衡度存在差异化影响,即相较于外资股东与机构股东制衡度,数字金融能够强化国有股东与民营股东对家族股东的制衡;数字金融能够通过提升非家族股东治理水平促进家族企业可持续发展。本文从数字金融视角探究非家族股东治理的动机,丰富了数字金融与非家族股东治理的相关研究。     

Corporate governance,globalization and firm productivity

We examine the relationship between globalization, corporate governance and firm productivity. The results, using longitudinal data from Korea, indicate that the positive effect of liberalising equity ownership on firms’ total factor productivity (TFP) was reinforced by indirect managerial effects when a firm improved its corporate governance. Our findings also confirm that the interaction of the managerial effect with increased foreign equity ownership is more significant than interaction with exports, suggesting that liberalising foreign investment in the host market is more effective in capitalising on the potential benefits of corporate governance reform than increasing exports to overseas markets, reflected in learning by exporting.     

Outward foreign direct investment of publicly listed firms from China: A corporate governance perspective

This study examines the influence of key corporate governance factors on the internationalization decisions of emerging economy (EE) firms. By integrating the resource-based view and agency theory, it investigates the effects of controlling owner identity, non-controlling shareholder ownership, and the interactions of these with CEO power, in order to reveal their individual and joint effects on the outward foreign direct investment (OFDI) propensity of EE firms. This empirical study of 224 Chinese publicly listed firms found positive effects of ownership of domestic institutional investors and foreign corporations on the OFDI propensity of the firms, which were moderated by the power of the CEOs in these firms.     

Corporate Social Responsibility and Corporate Governance: Role of Context in International Settings

This research aims to explore the relationship between corporate governance and CSR: What are the major factors that play a direct role in the establishment of this relationship? How does context and institutional background impact upon the relationship between CSR and Governance? Using in-depth semi-structured interviews from two types of governance systems in three countries over three years, this study has demonstrated that in practice, within different settings, CSR is being used both as a strategy as well as a reaction to different drivers. We call this adaptive governance where governance can be defined as a flexible system of action incorporating strategic and monitoring activities that determines the way a company enacts its responsibilities to its shareholders and stakeholders and which is determined at any given time by the interrelationship of institutional drivers and behavioural norms. Governance systems and their interrelationships with CSR are demonstrated as fluid according to the national and institutional context, economic situation and industry impact. In the eyes of practitioners corporate governance includes both structural and behavioural factors as well as responsibilities and actions towards shareholders and stakeholders. Contextual factors that this research highlights to be important to the incorporation of CSR into governance include the economic environment, national governance system, regulation and soft law, shareholders, national culture, behavioural norms and industry impacts. Hypotheses on the impact of institutional contexts, industry impacts and economic situations on different types of CSR actions are proposed for further research.     

The determinants of foreign direct investment in China: The case of Taiwanese firms in the IT industry

This study illustrates the factors that affect a firm's intention to engage in foreign direct investment (FDI) in China, using Taiwanese firms in the Information Technology (IT) sector as an example. By building upon the literature, we investigate a firm's decision to engage in FDI by taking industry and firm factors into consideration. This study applies an event history technique to perform an empirical analysis, taking into account the conditional probability of the element of time. These factors are analyzed in a dynamic context using a sample of 667 Taiwanese firms in 10 industries between 1996 and 2005. We find that network linkages, the expansion of markets, and China's incentive policies positively affect the intention to engage in FDI. A firm with a higher degree of export orientation and larger firm size also has a strong effect on motivating FDI.     

法律、制度与上市公司最佳股权结构

国内外绝大部分研究者支持股权集中度与投资者法律保护之间的替代假说,认为适度的股权集中有利于公司治理和公司绩效。公司治理效率与否,与其初始治理结构关系重大,但法律及制度对公司股权结构有重大影响。根据我国目前的国情,多个大股东并存的股权集中模式是全流通时代我国上市公司股权结构的最佳选择。可以通过两种途径对我国上市公司的股权结构进行引导:一是通过制定法律,鼓励法人间的相互持股,并提高司法体制的效率;二是寻求功能替代性的制度安排,比如鼓励上市公司股票发行方式的变革、鼓励资产重组、引导外资收购等。     

Intragroup Transactions,Corporate Governance,and Corporate Philanthropy in Korean Business Groups

This study examines how the corporate philanthropy decisions of group-affiliated firms in Korea (Chaebol firms) are made. Based on the attention-based view, we argue that when corporate decision makers at group-affiliated firms focus their attention more (less) on internal markets than external stakeholders because of the firm’s high (low) reliance on intragroup transactions, the firm will decrease (increase) its level of corporate philanthropy. We further argue that the relationship will be stronger when governance mechanisms focus on the instrumental value of corporate philanthropy. Using a panel sample of group-affiliated firms in Korea from 2011 to 2015, we find that as intragroup sales increase, the level of corporate philanthropy decreases, and such a negative relationship is stronger when outside director representation and foreign investor ownership are high. Our study suggests that internal dependence and corporate governance mechanisms jointly affect the level of corporate philanthropy at firms in a business group. Thus, this study contributes to the literature on corporate philanthropy, business group, and corporate governance.     

International investors’ reactions to cross-border acquisitions by emerging market multinationals

How do international investors react to announcements of cross-border mergers and acquisitions (CM&As) by emerging market multinational enterprises (EMNEs)? Using a unique and manually-constructed firm-level dataset, this paper examines the stock price reactions to CM&A announcements made over the period 1991–2010 by Chinese MNEs listed on the Hong Kong Stock Exchange and the wealth impacts of their corporate governance. Our empirical findings confirm a positive stock price reaction on average, and suggest that international investors react positively to the presence of large shareholders, but negatively to the presence of institutional shareholders. There is a negative impact if the largest shareholder is either the State or the corporate founder. We suggest that this is because the international investors perceive potential principal–principal conflicts in such ownership/control constellations and discount equity prices accordingly. We also find that Board size and independence have positive effects on the price reaction, but that large supervisory boards engender negative reactions.     

The Effect of Ownership Structure on Corporate Social Responsibility: Empirical Evidence from Korea

Relatively little research has examined the effects of ownership on the firms’ corporate social responsibility (CSR). In addition, most of it has been conducted in the Western context such as the U.S. and Europe. Using a sample of 118 large Korean firms, we hypothesize that different types of shareholders will have distinct motivations toward the firm’s CSR engagement. We break down ownership into different groups of shareholders: institutional, managerial, and foreign ownerships. Results indicate a significant, positive relationship between CSR ratings and ownership by institutions and foreign investors. In contrast, shareholding by top managers is negatively associated with firm’s CSR rating while outside director ownership is not significant. We conclude that different owners have differential impacts on the firm’s CSR engagement.     

Expanding near the home base or venture far? The influence of home country state on the economic distance of foreign direct investments

The extent of the economic distance between a firm's home origin and its foreign direct investment (FDI) is an important strategic decision for the investing firm. This study fills an important knowledge gap by investigating the home institutional antecedents of FDI economic distance. Drawing insights from comparative institutionalism, we argue that home-country states vary in both their power to coordinate the economy and the external and internal channels through which they exercise that power. These variations have implications on a firm's motivation and capability to escape external dependencies on the home-country state by investing in economically distant foreign locations. Empirically, using a dataset of 891 new international entrants from 2004 to 2011, we found support for our hypotheses that home-country state power is positively associated with FDI economic distance, and that the influence of the home-country state is contingent on the state's governance quality and its ownership in firms.     

Does diversification add firm value in emerging economies? Effect of corporate governance

Using 205 Taiwanese firms spanning five years, this research examines how corporate governance factors specific to emerging economies determine the extent of diversification and moderate its performance. The analyses reveal that controlling family ownership is significantly associated with a greater extent of diversification, which impairs firm value. Conversely, domestic bank ownership significantly decreases diversification, which in turn increases diversification performance. These findings present the evidence of controlling family entrenchment through diversification and the significant role domestic banks play in the principal–principal corporate governance framework.     

证券市场选择是否影响公司业绩与价值?--来自中国房地产行业的经验证据

企业在不同资本市场之间的选择往往是上市过程中一个重要决策。上市地点是否会影响其后续业绩表现以及价值？文章基于中国内地房地产企业数据的研究发现,在中国香港上市的企业比在中国内地上市的企业经营业绩更优,而两者在股市价值上并无显著差别。另外,在(中国)香港上市的房地产企业中,国有企业股市价值低于非国有企业;而在中国内地上市的房地产企业中,国有企业股市价值高于非国有企业。研究结果说明,证券市场完善的监管有利于降低代理人问题,提高企业经营业绩。     

FDI expansion speed of state-owned enterprises and the moderating role of market capitalism: Evidence from China

Drawing on an institutional logics perspective and isomorphism viewpoint, we posit that the negative impact of state ownership on the speed of foreign direct investment (FDI) expansion is attributed to the state socialism logic, which is inconsistent with market-oriented mechanisms that underpin rapid international expansion. We further argue that firms associated with the market capitalism logic shape an institutional context in which state-owned enterprises (SOEs) may adjust their behaviors by adopting market-oriented practices to expand quickly in the global market. Using outward FDI project information from Chinese listed firms over a fourteen-year period, we find evidence that confirms our theoretical predictions. Our analysis shows that, despite the negative relationship between state ownership and the speed of an SOE’s FDI expansion, both the non-state economy in the firm’s subnational region and privately owned enterprises in its industry sector positively moderate this relationship. This study enriches our understanding of institutional complexity in emerging markets and internationalization of emerging-market firms.     

制度环境与民营企业治理结构变迁——基于国美电器的案例分析

本文以班纳德孙-范氏模型为基础,通过对国美电器从"家族经营-家族所有权"到"家族经营-所有权分散",再到"职业经营-所有权分散"的治理结构变迁过程的分析,揭示了微观层面的最佳治理结构选择是由宏观层面的制度环境因素决定的,即公司治理结构会随着制度环境的变化而变化。     

Foreign direct investment,black economic empowerment and labour productivity in South Africa

The impact of foreign direct investment (FDI) on domestically owned firms in developing countries has been widely debated in the literature. It has been argued that FDI provides access to advanced technologies and other intangible assets, which may spill over to the host country and allow domestic firms to improve their performance. While there is a substantial literature on this issue, for obvious reasons, little is known about the effect of FDI on domestic firms in the African context. Noting this gap, this paper uses two-period (2003 and 2007) firm level panel data from South Africa to examine the impact of FDI on the labour productivity of domestic firms. A key policy change during this time period was the passage of the broad-based black economic empowerment act (BB-BEE) and we also examine the effect of the interaction between foreign firm ownership and BEE on labour productivity. Regardless of the empirical specification, we find no spillover effects and no evidence that a greater degree of BEE compliance by foreign firms influences labour productivity.