Foreign Investors as Change Agents: The Swedish Firm Experience

Kathy S. Fogel (), Kevin K. Lee (), Wayne Y. Lee () and Johanna Palmberg
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Kathy S. Fogel: University of Arkansas
Kevin K. Lee: California State University
Wayne Y. Lee: University of Arkansas

No 311, Working Paper Series in Economics and Institutions of Innovation from Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies

Abstract: Institutional theory suggests that informal institutions effectively constrain human behavior. Culturally embedded norms and values align corporate governance with socially acceptable outcomes. We argue that active foreign investors can act as agents of change in corporate governance. Investigating changes in ownership and control of Swedish firms, we find that active foreign investors’ participation in conjunction with a reduction of control by the largest domestic shareholder, improves firm performance through more efficient capital utilization and labor productivity. Firms move away from a Swedish stakeholder orientation toward an Anglo-American shareholder wealth maximization focus.

Keywords: Foreign Direct Investors; Informal Institution; Business Culture (search for similar items in EconPapers)
JEL-codes: E02 G32 G34 G38 M14 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-05-24
New Economics Papers: this item is included in nep-bec, nep-hme and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:cesisp:0311

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