Country-level macro-corporate governance and the outward foreign direct investment: Evidence from China
Abstract
Purpose
China’s outward foreign direct investment (ODI) has become a recent phenomenon in that China is now rated as the world’s third largest country for ODI. Previous studies have found that China’s ODI is driven by the attractions of natural resources and overseas markets. Yet these studies have ignored the role of corporate governance at a national level, the paper aims to discuss these issues.
Design/methodology/approach
The Kaufmann et al. (1999) data set is used in our study and the data sample have covered the period from 2003 to 2012 for a comprehensive set of 171 host countries. Random effects model are applied in the paper and population average model is used to check the robustness of the results.
Findings
The authors find that the effects of macro-corporate governance are distinct in different sample periods, as well as in geographical and economic regions, when attracting China’s ODI. Indicators such as political stability, the absence of violence, regulatory effectiveness, regulatory quality, the rule of law and the control of corruption are found to be positively related to China’s ODI.
Originality/value
This is one of the first papers to investigate the relationship between macro-corporate governance indicators and China’s ODI. 171 countries are included in the data sample and sub-sample tests are also conducted.
Keywords
Acknowledgements
The authors would like to thank the reviewer and the editor of the Journal for many useful and insightful comments. The authors are, however, solely responsible for any errors and omissions that may remain in the paper.
Citation
Tong, T., Singh, T. and Li, B. (2018), "Country-level macro-corporate governance and the outward foreign direct investment: Evidence from China", International Journal of Social Economics, Vol. 45 No. 1, pp. 107-123. https://doi.org/10.1108/IJSE-09-2016-0243
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited