Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective
Although foreign equity ownership around the world has increased substantially over the last three decades, there is little evidence on the role of foreign ownership in the host country. Using a large sample of foreign partial acquisitions in the US from 1981 to 1999, we examine the determinants of...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2013
|
| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/100450 http://hdl.handle.net/10220/18127 |
| _version_ | 1826118856097136640 |
|---|---|
| author | Kang, Jun-Koo Kim, Jin-Mo |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Kang, Jun-Koo Kim, Jin-Mo |
| author_sort | Kang, Jun-Koo |
| collection | NTU |
| description | Although foreign equity ownership around the world has increased substantially over the last three decades, there is little evidence on the role of foreign ownership in the host country. Using a large sample of foreign partial acquisitions in the US from 1981 to 1999, we examine the determinants of foreign acquirers’ governance activities in US targets. We focus on the information asymmetries that foreign acquirers face in the US as a key determinant of their governance activities in US targets, and hypothesize that such information asymmetries provide them with weak incentives to engage in governance activities. Consistent with our hypothesis, we find that foreign acquirers whose countries share a common language and a common culture with the US are more likely to engage in post-acquisition governance activities than are other foreign acquirers. Moreover, the probability of foreign acquirers’ governance activities is positively related to their previous acquisition activities in the US, but negatively related to the physical distance from the targets and the difference in shareholder rights scores between the US and their home countries. Our results suggest that information asymmetries that foreign acquirers face in the host country are an important determinant of their governance activities in domestic targets. |
| first_indexed | 2024-10-01T04:50:21Z |
| format | Journal Article |
| id | ntu-10356/100450 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T04:50:21Z |
| publishDate | 2013 |
| record_format | dspace |
| spelling | ntu-10356/1004502023-05-19T06:44:40Z Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective Kang, Jun-Koo Kim, Jin-Mo Nanyang Business School Business Although foreign equity ownership around the world has increased substantially over the last three decades, there is little evidence on the role of foreign ownership in the host country. Using a large sample of foreign partial acquisitions in the US from 1981 to 1999, we examine the determinants of foreign acquirers’ governance activities in US targets. We focus on the information asymmetries that foreign acquirers face in the US as a key determinant of their governance activities in US targets, and hypothesize that such information asymmetries provide them with weak incentives to engage in governance activities. Consistent with our hypothesis, we find that foreign acquirers whose countries share a common language and a common culture with the US are more likely to engage in post-acquisition governance activities than are other foreign acquirers. Moreover, the probability of foreign acquirers’ governance activities is positively related to their previous acquisition activities in the US, but negatively related to the physical distance from the targets and the difference in shareholder rights scores between the US and their home countries. Our results suggest that information asymmetries that foreign acquirers face in the host country are an important determinant of their governance activities in domestic targets. Accepted version 2013-12-06T04:27:07Z 2019-12-06T20:22:46Z 2013-12-06T04:27:07Z 2019-12-06T20:22:46Z 2010 2010 Journal Article Kang, J. K., & Kim, J. M. (2010). Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective. Journal of International Business Studies, 41(8), 1415-1438. https://hdl.handle.net/10356/100450 http://hdl.handle.net/10220/18127 10.1057/jibs.2010.18 en Journal of international business studies © 2010 Academy of International Business. This is the author created version of a work that has been peer reviewed and accepted for publication by Journal of International Business Studies, Academy of International Business. It incorporates referee’s comments but changes resulting from the publishing process, such as copyediting, structural formatting, may not be reflected in this document. The published version is available at: [http://dx.doi.org/10.1057/jibs.2010.18]. 24 p. application/pdf |
| spellingShingle | Business Kang, Jun-Koo Kim, Jin-Mo Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title | Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title_full | Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title_fullStr | Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title_full_unstemmed | Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title_short | Do foreign investors exhibit a corporate governance disadvantage? An information asymmetry perspective |
| title_sort | do foreign investors exhibit a corporate governance disadvantage an information asymmetry perspective |
| topic | Business |
| url | https://hdl.handle.net/10356/100450 http://hdl.handle.net/10220/18127 |
| work_keys_str_mv | AT kangjunkoo doforeigninvestorsexhibitacorporategovernancedisadvantageaninformationasymmetryperspective AT kimjinmo doforeigninvestorsexhibitacorporategovernancedisadvantageaninformationasymmetryperspective |