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Journal of International Business Studies

, Volume 49, Issue 2, pp 172–195 | Cite as

State ownership and transparency in foreign direct investment

  • Anthony P Cannizzaro
  • Robert J Weiner
Article

Abstract

We contribute to IB literature on state-owned multinationals by examining an understudied element of MNE strategy – transparency. Drawing insight from accounting, finance, and political science, we develop theory and hypotheses regarding ownership effects on FDI disclosure. We argue that transparency of outward FDI depends on both state ownership and home and host country institutions. We also posit that host governments harness their SOEs to exploit information disclosed by foreign MNEs, discouraging inward FDI transparency. We test our hypotheses using a unique transaction-level database from the global petroleum industry. Analyzing a sample of 965 investment disclosures across 81 developing and developed countries, we find state ownership reduces MNE transparency; SOEs are less sensitive to host country political risk than private firms; SOEs from better-governed countries are more transparent; and regardless of ownership, foreign MNEs are more opaque when investing in the presence of a host country SOE.

Keywords

state ownership transparency voluntary disclosure political risk institutions 

Résumé

Nous contribuons à la littérature de l’international business sur les multinationales publiques en examinant un élément peu étudié de la stratégie des entreprises multinationales (EMN) : la transparence. Tirant parti de connaissances en comptabilité, finance et sciences politiques, nous développons une théorie et des hypothèses concernant les effets de l’origine de la propriété sur la divulgation des IDE. Nous soutenons que la transparence des IDE sortants dépend à la fois de la participation de l’État et des institutions du pays d’origine et du pays d’accueil. Nous proposons également que les gouvernements hôtes utilisent leurs entreprises publiques pour exploiter les informations divulguées par les EMN, ce qui décourage la transparence des IDE entrants. Nous testons nos hypothèses à l’aide d’une base de données unique concernant les transactions de l’industrie pétrolière mondiale. Analysant un échantillon de 965 informations sur l’investissement dans 81 pays développés ou en développement, nous constatons que : la participation l’État réduit la transparence des EMN; les entreprises publiques sont moins sensibles au risque politique du pays hôte que les entreprises privées; les entreprises publiques des pays mieux gouvernés sont plus transparentes; et, quelle que soit l’origine de la propriété, les EMN étrangères sont plus opaques lorsqu’elles investissent en présence d’une entreprise publique d’un pays hôte.

Resumen

Contribuimos a la literatura de negocios internacionales sobre multinacionales estatales a través de examinar un elemento poco estudiado de la estrategia de las empresas multinacionales (EMN) – transparencia. Tomando en cuenta entendimientos de la contabilidad, las finanzas y la ciencia política, desarrollamos teorías e hipótesis sobre los efectos de propiedad sobre la divulgación de la inversión extranjera directa (IED). Argumentamos que la transparencia de la IED saliente depende tanto de la propiedad del estado como de las instituciones del país de origen y de destino. También postulamos que los gobiernos anfitriones aprovechan sus empresas estatales para explotar la información divulgada por las multinacionales extranjeras, lo que desalienta la transparencia de la IED de entrada. Ponemos a prueba nuestras hipótesis usando una base de datos única a nivel de transacción de la industria petrolera mundial. Analizando una muestra de 965 divulgaciones de inversiones en 81 países en vía de desarrollo y desarrollados, encontramos que la propiedad del estado reduce la transparencia de las EMN; las empresas estatales son menos sensitivas al riesgo político en los países anfitriones que las empresas privadas; las empresas estatales de países mejor gobernados son más transparentes; sin importar la propiedad, las EMN extranjeras son más opacas cuando invierten en la presencia de empresas estatales en un país anfitrión.

Resumo

Contribuímos para a literatura de IB em multinacionais estatais examinando um elemento pouco estudado da estratégia de MNE - transparência. Inspirando conclusões advindas da contabilidade, finanças e ciência política, desenvolvemos teoria e hipóteses sobre os efeitos da propriedade sobre a divulgação de investimiento estrangeiro direto (IED). Argumentamos que a transparência de IED para fora depende da propriedade estatal e das instituições do país de origem e de destino. Também propomos que governos anfitriões aparelham suas empresas estatais para explorar informações divulgadas por MNEs estrangeiras, desencorajando a transparência de IED entrante. Testamos nossas hipóteses usando um banco de dados a nível de transação único da indústria global de petróleo. Analisando uma amostra de 965 divulgações de investimentos em 81 países em desenvolvimento e desenvolvidos, achamos que a propriedade estatal reduz a transparência das MNE; as empresa estatais são menos sensíveis ao risco político do país de acolhimento do que as empresas privadas; as empresas estatais de países melhor governados são mais transparentes; e, independentemente da propriedade, MNEs estrangeiras são mais opacas quando investem na presença de uma empresa estatal de país de acolhimento.

概要

我们研究跨国企业战略里少有研究的元素 – 透明度,从而对国有跨国公司的IB (国际商务)文献做出贡献。借鉴会计、财务和政治学的视角,我们提出了关于外国直接投资(FDI)披露的所有权效应的理论和假设。我们认为,对外直接投资的透明度取决于国家所有权及本国和东道国的制度。我们还假设,东道国政府管理国有企业(SOEs)去利用由外国跨国企业(MNEs)披露的信息,阻碍了对内的外来直接投资的透明度。我们使用来自全球石油行业独特的交易层面的数据库来测试我们的假设。通过分析81个发展中国家和发达国家的965个投资披露样本,我们发现国家所有权降低跨国企业透明度; 国有企业对东道国政治风险的敏感度低于私有企业; 更好治理的国家的国有企业更加透明化; 不管所有权如何,外国跨国企业在东道国国有企业在场时投资会更不透明。

Notes

Acknowledgements

We are grateful to IHS Herold for database access; to Meghana Ayyagari, Reid Click, Jennifer Spencer, Nathan Jensen, Jorge Walter, Jennifer Oetzel, Xiaowei Rose Luo, Jordan Siegel, the editor (Mona Makhija), three anonymous referees, and participants at the GW International Business Workshop and the ISNIE, AIB, and AOM annual meetings for comments; and to the GW CIBER and Robin Liebowitz for generous financial support. All omissions and mistakes are ours.

Supplementary material

41267_2017_117_MOESM1_ESM.pdf (1.3 mb)
Supplementary material 1 (PDF 1298 kb)

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Copyright information

© Academy of International Business 2017

Authors and Affiliations

  1. 1.The Catholic University of AmericaWashingtonUSA
  2. 2.Department of International BusinessGeorge Washington UniversityWashingtonUSA

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