Country Level Corporate Governance and Direct Foreign Investment in Sub-Saharan Africa.

Abstract

This study examined the relationship between corporate governance and direct foreign investment in Sub – Saharan African. This study differentiates itself from literature by introducing new measures from global competitiveness index for corporate governance. The measures include ethical behaviour of firms, efficacy of corporate board, protection of minority shareholders and regulation of security exchange from 2009 to 2015.The study was guided by Eclectic theory and new institutional economic theory. The study employed Generalized Method of Moment (GMM) technique. The study has concluded that corporate governance has influence on direct foreign investment in Sub – Saharan Africa. Ethical behaviour of firms, efficacy of corporate governance, minority shareholders protection have positive influence direct foreign investment positive while regulation of securities exchange have negative influence on direct foreign investment. The study suggests that Sub – Saharan Africa economies should work on improving the ethical behaviour of firms, ensure that corporate boards are efficient and interest of minority shareholders are protected. However, regulation of security exchange should be reduced or made friendly in order to raise the inflows from direct foreign investment.