A Clash of Governance Logics: Foreign Ownership and Board Monitoring
Forthcoming in the Strategic Management Journal (published online Dec. 4, 2014)
42 Pages Posted: 21 Mar 2015
Date Written: March 20, 2013
We ask whether and when shareholder-oriented foreign owners are likely to change corporate governance logics in a stakeholder-oriented setting by introducing shareholder-oriented governance practices. We focus on board monitoring and claim that because the bundle of practices used in a stakeholder context does not protect shareholder-oriented foreign owners’ interests, they seek to introduce their own practices. Our results suggest that board monitoring is only activated when shareholder-oriented foreign ownership is high and that the influence of foreign ownership is especially strong in firms without large domestic owners, with high levels of risk and poor performance. Our findings uncover the possibility of the co-existence of different corporate governance logics within a given country, shaped by the nature and weight of foreign owners.
Keywords: Corporate Governance, Ownership, Board Monitoring, Board of Directors, Audit Fees
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