The Impact of Corruption and National Characteristics on Foreign Direct Investment

• Main Authors: Ying Tiang, 程瑩
• Other Authors: Lin, Anchor Y.
• Format: Others
• Language: en_US
• Published: 2015
• Online Access: http://ndltd.ncl.edu.tw/handle/82604967689775069113

碩士 === 國立中興大學 === 財務金融學系所 === 103 === The nature of greed, corruption has been always a big issue in every country. It is an important impact on cross-border market entry, investment and other decisions of strategy management at the international level. This study examines the decision of cross-border direct investment is affected by corruption level and different national characteristics in forty-five countries by using a panel dataset from 1996 to 2014. Corruption level uses the Corruption Perception Index (CPI) scores and corruption level ranking, which computed by Transparency International from 1996 to 2014. By using the change of corruption ranking to indicate the improvement in corruption of each country. Two assumptions are derived which buy and sell are made by one investor, the other is buyer and seller are two different investors. All works on this issue has been based on equity trading data which are derived from Treasury International Capital (TIC). By regressing level of corruption, economy, market capitalization, region, religion, colony, the date of market open and economic freedom which will influence the invest decision of U.S. investors. We find that as information asymmetries, the countries which have lower ranking of corruption bring a good opportunity for both buy and sell side investor to do trading. By panel data regression model, results indicated that U.S. investors like to invest in the countries that have a large market capitalization, lower level of corruption, different region and religion, market that opened before 1996, emerging countries, colonized countries and like to sell the stock of the country that is large market capitalization, higher financial freedom, emerging country and the country which market is opened before 1996. This paper provides the reference for investors and government officials in future investments and policy making in attracting foreign equity inflow.