A study on investment decision-making by U.S. firms finds that they shy away most from overseas companies with ownership structures that "are more conducive to outside investor expropriation." The study of 4,411 firms in 29 emerging and developed markets is carried by the Development Gateway. It notes that lack of information about firms and the state of national legal institutions are greater factors in investment decisions than a country's economic development.
In an era when foreign capital is an increasingly important source of financing for emerging market companies in particular, the study's findings go a long way toward answering the question of whether corporate governance matters and how to address it.
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