Volume 24, Numbers 3 & 4 / September/December , Pages 119-266
U.S. FDI and Shareholder Rights Protection in Developed and Developing Economies
Multinational Finance Journal, 2020, vol. 24, no. 3/4, pp. 155-182
Vishaal Baulkaran , University of Lethbridge, Canada    Corresponding Author
Nathaniel C. Lupton , San Jose State University, USA

We examine the impact of shareholder rights protection on U.S multinational firms’ Foreign Direct Investments (FDI). We hypothesize that the expropriation of wealth is less likely to occur in countries with strong shareholder rights and hence, these countries will attract more FDI relative to countries with weaker shareholder rights protection. We also hypothesize that this relationship will be more important for developing countries compared to developed countries. Based on an analysis of US FDI data over the period 1997-2016, we find support for our predictions. These findings emphasize the importance of institutional development for economic development, via the attraction of FDI.

Keywords : FDI; expropriation; shareholder rights; multinational firms
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