Corporate Governance and International Location Decisions of Multinational Enterprises

Abstract

This paper analyzes international location decisions of corporations based on corporate governance considerations. Using firm level data on 540 Multinational Enterprises (MNEs) with 44,149 subsidiaries in 188 countries, we test whether firms with relatively good governance standards are more often located in countries with a weak governance system. We find empirical support for this hypothesis, especially for those corporations present in low-income countries.