Kathy S. Fogel
(), Kevin K. Lee
(), Wayne Y. Lee
() and Johanna Palmberg
Kathy S. Fogel: University of Arkansas
Kevin K. Lee: California State University
Wayne Y. Lee: University of Arkansas
Johanna Palmberg: Entrepreneurship Forum, CESIS, KTH
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.
44 pages, May 24, 2013
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