Abstract:
This study seeks to deepen our understanding on how countrylevel
governance structures influence prevalence of foreign
ownership of firms in Africa. This study reinforces the new
institutional economics perspective by empirically highlighting
that governance structures influence the prevalence of foreign
ownership of companies in an economy. Using archival data
from 39 African economies, we found that there is a significant
positive association between regulatory quality and foreign
ownership prevalence. Also, foreign ownership is prevalent in
African countries that are politically stable and embrace rule of
law. However, we found that countries with high voice and
accountability structures are associated with low foreign ownership
prevalence.
