Corporate Governance and Foreign Ownership: The Impact of Stricter Regulatory Sanctions

41 Pages Posted: 15 Nov 2016 Last revised: 25 Dec 2016

See all articles by Bibek Bhatta

Bibek Bhatta

Abertay University

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School

Suman Neupane

Griffith University - Department of Accounting, Finance and Economics

Chandra Thapa

University of Strathclyde

Date Written: November 14, 2016

Abstract

We examine whether stricter non-compliance sanctions on corporate governance regulations influence the investment decisions of foreign portfolio investors in emerging markets. To answer this question we use a natural experiment provided by a corporate governance regulatory reform introduced in 2000 for which stricter sanctions for non-compliance were imposed in 2004. Using firm-level panel data from 2001 to 2007, our results provide strong evidence that reforms that include stricter sanctions for non-compliance lead to higher foreign ownership. Depending on specifications, the difference-in-differences estimates show that, on average, the effect is 3% to 5% increased foreign ownership post regulatory reform of 2004.

Keywords: corporate governance reform, stricter sanctions, foreign equity ownership, panel data, difference-in-differences

JEL Classification: G30, G11, K22

Suggested Citation

Bhatta, Bibek and Marshall, Andrew P. and Neupane, Suman and Thapa, Chandra, Corporate Governance and Foreign Ownership: The Impact of Stricter Regulatory Sanctions (November 14, 2016). Available at SSRN: https://ssrn.com/abstract=2869065 or http://dx.doi.org/10.2139/ssrn.2869065

Bibek Bhatta

Abertay University ( email )

Bell Street
Dundee, DD1
United Kingdom

Andrew P. Marshall

University of Strathclyde - Strathclyde Business School ( email )

100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 548 3894 (Phone)

Suman Neupane

Griffith University - Department of Accounting, Finance and Economics ( email )

170 Kessels Road
Nathan, Queensland 4111
Australia

Chandra Thapa (Contact Author)

University of Strathclyde ( email )

16 Richmond Street
Glasgow 1XQ, Scotland G1 1XQ
United Kingdom

HOME PAGE: http://https://www.strath.ac.uk/staff/thapachandradr/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
94
Abstract Views
918
rank
327,334
PlumX Metrics