Impact of Corporate Governance on Foreign Direct Investment in Nigeria

30 Pages Posted: 30 Nov 2009

See all articles by Ismail A. Adelopo

Ismail A. Adelopo

De Montfort University - Leicester Business School

Kamil Omoteso

De Montfort University - Leicester Business School

Musa Obalola

De Montfort University - Leicester Business School

Date Written: November 28, 2009

Abstract

The United Nation's Millennium Development Goals for Africa suggest the need for these economies to attract substantial amount of foreign direct investments (FDI) to stimulate growth by investing in essential development infrastructures. However, investors are skeptical of opaque corporate governance structures both at firm and macro levels because of the attendant risk to their investments in an environment of weak legal system and poor human right records. Recent events indicate that a number of these economies have realised the importance of good governance systems and the need to signal transparency and accountability both at firm and country levels and have embarked on significant corporate governance reforms.

In this paper we did a trajectory of corporate governance reforms in Nigeria and using time series data spanning over a decade we empirically investigated the determinants of foreign capital inflow arguing that in addition to the factors identified in the literature, FDI is positively related to improvement in corporate governance (CG). The paper further argued that although corporate governance prescriptions should be contextualised within the distinctive nature of the developing economies, this should not be stressed too strongly in order not to discourage potential foreign investors. The paper also attempted to identify future directions of the relationship between CG initiatives and FDI in Nigeria.

Keywords: Corporate Governance, Foriegn Direct Investments, Nigeria

JEL Classification: A10, E50, F30

Suggested Citation

Adelopo, Ismail A. and Omoteso, Kamil and Obalola, Musa, Impact of Corporate Governance on Foreign Direct Investment in Nigeria (November 28, 2009). Available at SSRN: https://ssrn.com/abstract=1514982 or http://dx.doi.org/10.2139/ssrn.1514982

Ismail A. Adelopo (Contact Author)

De Montfort University - Leicester Business School ( email )

Milton Keynes, MK7 6HP

Kamil Omoteso

De Montfort University - Leicester Business School ( email )

Milton Keynes, MK7 6HP
United Kingdom

Musa Obalola

De Montfort University - Leicester Business School ( email )

Milton Keynes, MK7 6HP
United Kingdom

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