Journal
JOURNAL OF WORLD BUSINESS
Volume 51, Issue 6, Pages 965-976Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.jwb.2016.08.003
Keywords
Foreign direct investment; Ownership; Ownership change; Property rights theory; Incomplete contracts; Corruption; Financial markets
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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. (C) 2016 The Authors. Published by Elsevier Inc. This is an open access article under the CC BY-NC-ND license (http://creativecommons.orgilicensesiby-nc-nd/4.0/).
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