Ownership Control of Foreign Affiliates: A Property Rights Theory Perspective

44 Pages Posted: 2 Nov 2016

See all articles by Nigel L. Driffield

Nigel L. Driffield

Aston University - Aston Business School

Tomasz Mickiewicz

Aston University - Aston Business School

Yama Temouri

Aston University

Date Written: August 24, 2016

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

Suggested Citation

Driffield, Nigel L. and Mickiewicz, Tomasz Marek and Temouri, Yama, Ownership Control of Foreign Affiliates: A Property Rights Theory Perspective (August 24, 2016). Available at SSRN: https://ssrn.com/abstract=2862968 or http://dx.doi.org/10.2139/ssrn.2862968

Nigel L. Driffield

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

HOME PAGE: http://www.abs.aston.ac.uk/newweb/staff/Default.asp#E&S

Tomasz Marek Mickiewicz (Contact Author)

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

Yama Temouri

Aston University ( email )

Aston Triangle
Birmingham, B4 7ET
United Kingdom

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