Boosting Foreign Investment: The Role of Certification of Corporate Governance

Pietro Bonetti and Gaizka Ormazabal

Journal of Accounting Research, 2023, vol. 61, issue 1, 95-140

Abstract: This paper studies the economic consequences of certification of corporate governance practices. For identification, we exploit a recent cross‐country initiative by a coalition of key institutions in Southeast Asia; the periodic publication of a “Top List” of companies in the region selected based on an independent assessment of corporate governance practices. Our results suggest that being included in the list induces an increase in foreign investment and changes in corporate governance practices. The announcement of the Top List elicits a positive stock market response among constituents and is followed by higher accounting performance. Overall, the evidence suggests that the certification of governance practices is a meaningful tool to boost foreign investment.

Date: 2023
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https://doi.org/10.1111/1475-679X.12468

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Persistent link: https://EconPapers.repec.org/RePEc:bla:joares:v:61:y:2023:i:1:p:95-140

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Journal of Accounting Research is currently edited by Philip G. Berger, Luzi Hail, Christian Leuz, Haresh Sapra, Douglas J. Skinner, Rodrigo Verdi and Regina Wittenberg Moerman

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