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We find a significant curvilinear relation between Japanese firm value and the percentage of equity held by foreign investors. Firm value rises until foreign ownership reaches approximately 40%, and then it begins to decline. It appears that large foreign institutional investors invest in well-performing firms and serve as effective monitors. Our results remain robust even after controlling for other corporate governance variables, such as equity ownership by main banks and board membership by foreign investors. It seems that most of the increase in firm value and the performance improvement are due to rising levels of equity ownership in non-keiretsu (independent) firms by foreign investors. We also show that an increase in foreign ownership is correlated with a rise in R&D expenditures, suggesting that foreign institutional investors contribute to the long-term viability and competitiveness of Japanese firms.

This study focuses on listed and over-the-counter (OTC) companies in the Taiwan Stock Exchange. It found that an increase in the ownership proportion of institutional investors (INs), including foreign investors, investment trusts, and dealers can enhance the informativeness of stock prices. The relationship between these factors follows an inverted U-shaped pattern, indicating that excessively high ownership ratios can actually lead to a decrease in the informativeness of stock prices. Additionally, increasing the ownership proportions of foreign investors and investment trusts can reduce the risk of stock price collapse, while dealers show no significant relationship in this regard. This study also reveals that the technical variable of the price deviation rate is an important explanatory factor for post-collapse returns. It is positively correlated with the magnitude of the price decline after a collapse, meaning that stocks with weaker pre-collapse performance experience larger post-collapse declines. When the data during the 2020 pandemic period are excluded, changes in foreign ownership ratios show a significant positive correlation with postcrash returns in both the long and short term. The significant correlation in the short term may be due to a high proportion of foreign ownership. Any reduction in this could put pressure on stock prices, and retail investors may follow suit and sell-off, using foreign investors as a reference. The significant correlation in the long term might be due to foreign investors themselves possibly also trying to avoid the pressure that their own short-term sell-offs could exert on stock prices. The changes in the ownership ratios of investment trusts and dealers indicate that medium and long-term changes have a significant impact on postcrash returns, while the changes in the major players' ownership show no significant correlation. When data from 2020 are included in the analysis, the significance of all INs decreases.

The 1997 financial crisis in Asia has entailed significant changes and governance reforms in the Korean banking industry. This study investigates the impact of corporate governance on the risk and return of Korean banks during the 10 years that followed the financial crisis era. In particular, we investigate the ownership structure of banks, the extent of involvement of foreign institutions and investors in ownership and board membership of Korean banks, and the heterogeneity of board structure on bank performance. Our findings indicate that foreign ownership, the extent of external board involvement, and the presence of foreign directors on the board are associated with significantly higher bank returns. Although foreign ownership and the number of outside board directors are associated with lower risk, the involvement of foreign board members is positively associated with risk. The results are fairly robust to a battery of tests and control variables, and offer the first detailed empirical documentation of the Korean banking governance reform and its achievements since 1997.

In this study, we analyze the general effect of acquirers’ ownership strategy on the survival in foreign acquisitions. Furthermore, we attempt to address five potential moderating effects: international, regional, target country experience, cultural distance, as well as host country development. The developed hypotheses are tested on a sample of 1,345 acquisitions made by 174 Finnish firms in 59 countries during 1980–2005. The results indicate that in general WOS increases the probability of survival of foreign acquired units. We further find that the impact of WOS on the survival of foreign acquired units is contingent upon cultural distance and host country development but not on the experience of buying firms.

The processes of liberalisation, globalisation and integration have brought new dynamics into banking markets. In an increasingly competitive environment, banks have been forced to refocus their strategies and examine their performance, because their survival in the 21st century will depend on efficiency (Denizer & Tarimcilar, 2001). In recent years, therefore, bank efficiency has received wide attention, and researchers have developed an extensive array of sophisticated methods and tools to estimate efficiency.

This research seeks to understand the drivers of outward foreign direct investments (FDIs) by state-owned emerging economy firms, the characteristics of their overseas FDI projects and investment locations, and the effects of home and host institutions on the market entry strategies, taking into account the legitimacy of state ownership.

The discussion is based on a comprehensive review of conceptual and empirical literature, as well as case studies available from recognized journals in the field.

State-owned emerging economy firms pursue outward FDIs to respond to policy incentives of the home government and to reduce its political influence over the firm. FDI projects are often large and risky and have low business values. They often enter countries where state ownership is perceived as more legitimate while engaging in legitimacy-building activities in these countries. When their home country has a high level of institutional restrictions, they are less likely to use acquisitions or hold high levels of equity control in foreign subsidiaries. To strengthen local legitimacy, they often use greenfield investments or share equity control with local firms in foreign subsidiaries, particularly when the host country is endowed with strategic assets or when it has a high level of institutional restrictions. However, when having high levels of state ownership or strong political connections, they often commit a high level of resources and hold a high level of equity control in foreign subsidiaries.

The literature mostly investigates the FDI of firms that are structurally separate from the institutions. When the institutions are endogenous as presented in this research, their strategic choices are substantially influenced by noncommercial political motives and perception on their political image.

Many studies of control and international joint venture (IJV) performance have focused on ownership and management control. We develop a conceptual framework to explain how strategies affect the relationship between management control and joint venture performance. Specifically, we focus on serving the host-country customer and extending the life cycle of the foreign partner's products. Using a sample of Sino–U.S. and Sino–Japanese joint ventures, we found that serving the host-country customer strengthens the positive relationship between management control by the foreign partner and IJV performance. However, extending the product life cycle of the foreign partner's products weakens the positive relationship between management control by the foreign partner and IJV performance. We discuss the performance implications of dealing with both strategies and reveal a complex relationship between equity ownership, management control, and IJV performance.

Research suggests that context matters for MNEs’ international business strategy. MNEs’ strategies vary when different intertwined contexts interact with each other. While International Business scholars understand well the influence of the institutional environments on firms’ international strategies and operations, some contextual differences are less understood as is the case involving African countries and firms. In this study we investigate how different institutional contexts and legitimacy challenges combine to impact ownership strategic choices of African firms in their cross-border acquisitions (CBAs). Specifically, we study the influence of the host country institutional development and two institutional dimension distances: administrative distance and knowledge distance. Methodologically, we use a sample of 314 CBAs made by acquirers from 24 African countries in 71 host countries worldwide to test a number of theoretically driven hypotheses. This study contributes to our understanding of how foreign investors from less institutionally developed countries that are more likely to face higher legitimacy barriers use ownership strategies to achieve legitimacy abroad.

Purpose – Examine the role of institutional investors in accelerating the development of capital markets and economies abroad, the determinants of their investment, both in the domestic and foreign markets, and their importance in promoting good corporate governance practices worldwide and facilitating increased financial integration.

Methodology/approach – Review and synthesize recent academic literature (1970–2011) on the process of international financial integration and the role of foreign institutional investors in the increasingly global financial markets.

Findings – Despite the concern that short-term flow of international capital can be destructive to the emerging and developing market economies, academic evidence on a destabilizing effect of foreign investment activity is limited. Institutional investors’ systematic preference for stocks of large, well-known, globally visible foreign firms can explain the presence of a home bias in international portfolio investment.

Research limitations – Given the breadth of the two literature streams, only representative studies (over 45 published works) are summarized.

Social implications – Regulators of emerging markets should first improve domestic institutions, governance, and macroeconomic fundamentals, and then deregulate domestic financial and capital markets to avoid economic and financial crises in the initial stages of liberalization reforms.

Originality/value of paper – A useful source of information for graduate students, academics, and practitioners on the importance of foreign institutional investors.

To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure.

We draw on longitudinal data and use a panel analysis specification to test our hypotheses.

We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification.

We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners.

Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations.

A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare.

Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.