Investor Protection and the Role of Firm-Level Financial Transparency in Attracting Foreign Investment

The Financial Review, Forthcoming

46 Pages Posted: 4 Feb 2015 Last revised: 30 Apr 2015

See all articles by Bowe Hansen

Bowe Hansen

Virginia Commonwealth University

Mihail K. Miletkov

University of New Hampshire - Paul College of Business and Economics

M. Babajide Wintoki

University of Kansas - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: October 7, 2014

Abstract

We ask if companies can attract foreign equity capital by improving the transparency of their financial statements. Using a large panel of firms across fifty-one countries outside the U.S., we show that the answer is yes, but only in countries with relatively high levels of investor protection. In countries with poor investor protection, unilaterally increasing firm-level transparency has no effect on foreign ownership. Furthermore, our results indicate that in countries with higher levels of investor protection the positive association between transparency and foreign ownership is stronger following a country’s adoption of the International Financial Reporting Standards.

Keywords: Foreign Ownership; Home Bias; Financial Transparency; Institutional Development; Investor Protection

JEL Classification: G15, G28, G32, M41

Suggested Citation

Hansen, Thomas Bowe and Miletkov, Mihail K. and Wintoki, Modupe Babajide, Investor Protection and the Role of Firm-Level Financial Transparency in Attracting Foreign Investment (October 7, 2014). The Financial Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2559926 or http://dx.doi.org/10.2139/ssrn.2559926

Thomas Bowe Hansen (Contact Author)

Virginia Commonwealth University ( email )

Richmond, VA 23284
United States

Mihail K. Miletkov

University of New Hampshire - Paul College of Business and Economics ( email )

10 Garrison Ave
Durham, NH 03824
United States

Modupe Babajide Wintoki

University of Kansas - School of Business ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
111
Abstract Views
917
rank
258,327
PlumX Metrics