State Ownership and transparency in Foreign Direct Investment: Loose-Lipped Leviathan?

Robert Weiner and Anthony Cannizzaro
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Robert Weiner: George Washington University
Anthony Cannizzaro: Catholic University of America

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: We contribute to literature on state-owned multinationals by examining an understudied element of MNE strategy - transparency. Drawing insight from accounting, finance and political science, we develop theory and hypotheses regarding ownership effects on FDI disclosure. We argue that transparency of outward FDI depends on both state ownership and home- and host-country institutions. We also posit that host governments harness their SOEs to exploit information disclosed by foreign MNEs, discouraging inward FDI transparency. We test our hypotheses using a unique transaction-level database from the global petroleum industry. Analyzing a sample of 965 investment disclosures across 81 developing and developed countries, we find state ownership reduces MNE transparency; SOEs are less sensitive to host-country political risk than private firms; SOEs from better-governed countries are more transparent; and regardless of ownership, foreign MNEs are more opaque when investing in the presence of a host-country SOE.

Pages: 38 pages
Date: 2017
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2017-18

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