Ownership control of foreign affiliates: A property rights theory perspective

Nigel Driffield, Tomasz Mickiewicz and Yama Temouri

Journal of World Business, 2016, vol. 51, issue 6, 965-976

Abstract: This paper applies property rights theory to explain changes in foreign affiliates’ ownership. Post-entry ownership change is driven by both firm-level characteristics and by the differences in the institutional environments in host countries. We distinguish between financial market development and the level of corruption as two different institutional dimensions, such that changes along these dimensions impact upon ownership change in different ways. Furthermore, we argue that changes in ownership are affected by the foreign affiliate’s relatedness with its parent’s sector, as well as by the affiliate’s maturity. We use firm level data across 125 host countries to test our hypotheses.

Keywords: Foreign direct investment; Ownership; Ownership change; Property rights theory; Incomplete contracts; Corruption; Financial markets (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (22)

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DOI: 10.1016/j.jwb.2016.08.003

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