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.     

What Drives Foreign Ownership in Japan? Evidence from Before and After Japan's Financial Crisis

The ownership structure of Japanese firms has long been characterized by the superiority of ownership by banks and business partners; however, after the mid-1990s, the relative share of foreign ownership increased significantly. Results from this study suggest that almost 90% of the variance in foreign ownership occurs within and between firms. As expected, a substantial percentage of the variance of foreigner ownership is explained by macroeconomic shocks. The results indicate that firm size, profitability, dividends, risk, and financial health are important factors that drive foreign ownership.     

Graft and business in emerging economies: An ecological perspective

In this study we examine how a firm's engagement in graft in emerging economies is shaped by its organizational attributes. Building on the logic of organizational ecology, we envisage that a firm's engagement in graft is influenced by its (1) institutional structure (e.g., public ownership, foreign ownership, and government ownership), (2) market orientation (foreign vs. local market), and (3) firm capabilities (e.g., capacity utilization, product quality, and leadership quality). Using the World Bank's data, we analyzed 1782 firms in China, Brazil, Russia, Poland and South Africa, and found general support for our argument. The results suggest that a firm's engagement in graft is, at least in part, an organizational phenomenon influenced by the firm's founding conditions, required legitimization in the market, and capability conditions.     

Who is afraid of political risk? Multinational firms and their choice of capital structure

This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such as expropriation, unreliable intellectual property rights and confiscatory taxation. In our theoretical analysis we find that, as political risk increases, the ownership share tends to decrease, whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects.     

Who is afraid of political risk? Multinational firms and their choice of capital structure

This paper investigates how multinational firms choose the capital structure of their foreign affiliates in response to political risk. We focus on two choice variables, the leverage and the ownership structure of the foreign affiliate, and we distinguish different types of political risk, such as expropriation, unreliable intellectual property rights and confiscatory taxation. In our theoretical analysis we find that, as political risk increases, the ownership share tends to decrease, whereas leverage can both increase or decrease, depending on the type of political risk. Using the Microdatabase Direct Investment of the Deutsche Bundesbank, we find supportive evidence for these different effects.     

Revisiting the role of cultural distance in MNC's foreign ownership mode choice: the moderating effect of experience attributes

This study investigates potential moderating effects of firm's experience levels in the relationship between cultural distance and foreign ownership mode choice. Using the well established Japanese FDI data base, it is found that higher levels of experience, particularly decision-specific experience (prior experience with a particular ownership structure mode), mitigates potential impacts of uncertainty and costs caused by the high level of cultural distance, thus uncovering one possible answer to the ‘national cultural distance paradox’ reported in the literature. These findings reinforce similar findings of interaction effects between key variables and cultural distance in studies involving other important strategic decisions of the MNC. The ‘decision-specific experience-moderated cultural distance’ variable, and not the ‘absolute cultural distance’ variable, is found to be an important determinant of a firm's foreign ownership mode choice. Furthermore, this variable dominates the other experience-moderated cultural distance variables (international business experience and host county experience-moderated cultural distance variables) in the ability to discriminate between full ownership and shared ownership modes. Based on this moderated cultural distance measure, we find strong evidence that cultural distance is positively associated with full ownership of Japanese foreign manufacturing entities.     

A dynamic monetary model with costly foreign currency

I present a dynamic general equilibrium monetary model with domestic and foreign currencies and a traded bond where there is an adjustment cost to switch into foreign currency. The focus is on the short versus long run trade-offs and transitional dynamics of domestic and foreign monetary disturbances as a function of attributes of currencies in utility. The main finding is that short and long run trade-offs and transitional dynamics together with the implied hysteresis property of the equilibrium are critical determinants of the qualitative results of domestic and foreign monetary disturbances in this class of model.     

法制环境、两权分离与资本结构动态调整

本文实证检验了法制环境以及控股股东控制权和所有权分离对资本结构动态调整的影响。研究发现：上市公司控股股东控制权和所有权分离程度越高,实际资本结构偏离最优资本结构的幅度越大,资本结构调整速度越慢;上市公司所处的法制环境越好,实际资本结构偏离最优资本结构的幅度越小,资本结构调整速度越快;法制环境的改善能够显著的缓解两权分离对资本结构动态调整的负面影响;结合中国的制度背景,基于公司产权性质的分析发现,相比国有上市公司,非国有上市公司受法制环境和两权分离的影响更加显著。     

中央政府与地方政府在所有制结构调整中的博弈分析

中央政府与地方政府在所有制结构调整中的博弈主要体现在两个方面,即所有制结构的增量调整和存量调整。在我们的博弈模型中,中央政府与地方政府在所有制结构调整上的博弈策略是不一样的。从中央政府与地方政府所有制结构的增量调整和存量调整的实际来看,不同的博弈策略确实导致了不同的所有制结构调整速度。与我们的博弈模型大体一致,地方政府在与中央政府进行所有制结构调整的博弈时,不同的地方政府所选择的调整速度又是有差异的。     

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

ABSTRACT

This study seeks to deepen our understanding on how country-level governance structures influence prevalence of foreign ownership of firms in Africa. This study reinforces the new institutional economics perspective by empirically highlighting that governance structures influence the prevalence of foreign ownership of companies in an economy. Using archival data from 39 African economies, we found that there is a significant positive association between regulatory quality and foreign ownership prevalence. Also, foreign ownership is prevalent in African countries that are politically stable and embrace rule of law. However, we found that countries with high voice and accountability structures are associated with low foreign ownership prevalence.     

Cyclicality of lending in Africa: The influence of bank ownership

Ownership structure of banks has dramatically changed over the past two decades in African countries with privatization and foreign bank entry, including the expansion of Pan-African banks. The objective of this paper is to investigate how bank ownership influences cyclicality of lending in Africa. We are then able to assess how changes in bank ownership influence the economy. To this end, we measure the sensitivity of bank loan growth to GDP per capita growth of the host country with dynamic GMM estimations. We use panel data from 190 commercial banks covering 20 African countries spanning the period from 2002 to 2015. We find that lending of African banks is procyclical for all types of banks. However, we observe that Pan-African banks are the least procyclical banks, while no significant difference in procyclicality is observed between state-owned banks, domestic private banks, and other foreign banks. In addition, we find evidence that foreign banks are influenced by GDP per capita growth of their home country. Therefore, our findings support the view that the expansion of Pan-African banks contributes to reduce cyclicality of lending. However, foreign bank entry can enhance the transmission of external shocks.     

Gaijin invasion? A resource dependence perspective on foreign ownership and foreign directors

While boards around the globe are becoming more international, the reasons behind this internationalization are not fully understood. In this study, we suggest that foreign ownership increases the presence of foreign directors on boards. Based on resource dependence theory, we argue that the dependence on foreign owners makes foreign nationals an important resource for firms. Using data from large Japanese stock market firms and employing logistic regression analysis, we find empirical evidence that greater dependence on foreign, i.e. gaijin, owners is associated with a higher probability to have foreign directors on the board. We also demonstrate that the link between foreign ownership and foreign directors is positively moderated by a firm’s foreign market exposure. We conclude that firms consider foreign directors a viable response to the deviant expectations of foreign owners.     

Examining Determinants of Foreign Wage Premiums in China

We estimate foreign wage premiums for every 3‐digit manufacturing industry in China and discover a wide range of premiums both for ‘foreign’ ownership and for overseas Chinese ownership. Foreign ownership generates larger and more prevalent wage premiums than overseas Chinese ownership, but both produce premiums that respond similarly in estimates of determinants. Using the number of computers per worker to measure firms' technology levels, we find evidence consistent with the hypothesis that foreign firms pay higher wages to reduce the risk of worker turnover and the accompanying technology leakage in 76 to 78 per cent of industries. However, this determinant explains only 5 to 6 per cent of the foreign wage premium. We find the most intensive support for the ‘fair wage’ hypothesis that foreign firms pay higher wages because they are more profitable than domestic firms and workers in more profitable firms expect to be paid more, otherwise they will shirk. This hypothesis explains an average of 8 to 9 per cent of the foreign wage premiums, with support found in 72 to 75 per cent of the industries. When we consider the best combination of explanatory variables to include in each industry's wage regression, we find evidence consistent with our combined hypotheses in most industries, but we still find large residual foreign wage premiums.     

Corporate boards and ownership structure: Evidence from Sub-Saharan Africa

This study examines the relationship between board structure and ownership structure for firms listed on the stock exchanges of twelve Sub-Saharan African countries, using data for the period 2006–2009. We find that ownership concentration, foreign ownership and managerial ownership are negatively associated with board size. We also find that government ownership is positively associated with the proportion of outside directors while ownership concentration is negatively associated with the proportion of outside directors. These results emphasize that board and ownership structure are both corporate governance mechanisms that are used as substitutes to one another in reducing agency problems.     

Investment motive as a moderator of cultural-distance and relative knowledge relationships with foreign subsidiary ownership structure

In this analysis, we seek to contribute to the growing body of literature exploring moderators of cross-national differences and foreign subsidiary ownership structure relationships, by developing the argument that cultural distance and majority-owned foreign subsidiary relationships will be positively moderated if a subsidiary serves a manufacturing motive, as opposed to a market-seeking motive. Additionally, we argue that relationships between increasingly greater levels of host country technical knowledge, relative to a firm's home country, and the use of majority-owned foreign subsidiary structures will be negatively moderated by manufacturing motives. These ideas are tested, and supported, in the empirical context of subsidiaries of Japanese automotive firms from 1993 through 2009.     

Stock liquidity and ownership structure during and after the 2008 Global Financial Crisis: Empirical evidence from an emerging market

This paper examines the impact of ownership structure, whether state owned, foreign owned or institutionally owned, on Vietnamese stock market liquidity in different market conditions. We find that state ownership is associated with lower liquidity after the 2008 financial crisis. Institutional ownership shows a weak influence on liquidity in the post-crisis period. During the financial crisis, however, liquidity declines could not be attributed to ownership structure. Our results imply that foreign investors have not yet played a significant role in driving stock market liquidity in Vietnam, which is counter to findings in the existing literature concerning liquidity in more developed markets. Our results are consistent across conventional liquidity measures and a composite liquidity measure.     

Competition, Market Structure and Job Turnover

Does internationalization mean increased reallocation of employment among plants and thus higher adjustment costs? This paper studies the reallocation of jobs among plants in the Swedish economy 1986–97 using micro data. It turns out that the rate of job turnover is high in industries with high rates of innovation and employment growth, and low in concentrated industries with limited competition. However, we find no evidence for the view that increased openness to international competition would increase job turnover. In fact turnover is lower in export oriented industries where foreign ownership is frequent.     

经济全球化下跨国资本流动的新趋势与对策

经济全球化下,跨国资本流动产生了有别于传统的新趋势。以控制海外企业所有权的对外直接投资已成为跨国资本流向的主要形式。外资控股对产业结构会带来一定的影响,跨国资本出于全球战略考虑,会强化资本输入国产业畸形发展,对我国产业结构调整和升级带来不利影响。因此,对于跨国资本流动新趋势和作用应从经济全球化和国家战略发展的维度来思考对策。     

The impact of kidnapping on foreign ownership of firms in Nigeria

Nigeria is one of the countries in Sub-Saharan Africa (SSA) that has faced high incidents of kidnapping. As a result of that, some studies have investigated its determinants and economic consequences in Nigeria. However, no study is yet to investigate its impact on the foreign ownership of firms. This is a research void that this article has attempted to fill. Using the World Bank Enterprise Survey and the United Nations Office on Drugs and Crime, we found empirical evidence of the negative impact of kidnapping on the foreign ownership of firms. An increase in the kidnapping rate by one (1 per 100,000 of population) will reduce the foreign ownership of firms by 4.855–10.098% depending on the econometric model. There is also empirical evidence that the impact of kidnapping on foreign ownership will vary by geographical regions in Nigeria and by firm size. Policy implications were deduced from our findings.     

HYSTERESIS IN THE DYNAMICS OF EMPLOYMENT

In this paper, we derive a micro model of employment demand with hysteresis whereby firms can adjust along an intensive (employment) and an extensive (hours of work) margin. A mechanism of aggregation over heterogeneous firms is used to generate the corresponding aggregate dynamics. Longitudinal micro monthly data on a representative sample of Portuguese manufacturing firms are used in the empirical analysis. Our results indicate that signs of hysteresis found at the micro level do not vanish completely by aggregation and that hysteresis is magnified by the existence of an additional margin of adjustment (the hours adjustment margin).