?Do Good Corporate Governance Practices Attract Foreign Portfolio Investment

Abstract

Corporate governance (CG) is an essential component of any business as it gives advice on how firms should be managed. Hence CG is becoming a topic of interest both domestically and globally. Interestingly, CG and foreign investment are viewed to be correlated. Thus, this research argues that sound CG practices have an effect on the quantity of foreign investment in general, and specifically on foreign portfolio investment (FPI). Ownership, independent directors, and shareholder protection are among the factors that have a substantial influence on the implementation of CG practices. The comparison of concentrated versus dispersed ownership has used as an approach to investigate their influence on CG principles. The research has revealed that nations and firms with dispersed ownership tend to have higher CG standards and to provide their shareholders with more protection, and this reflected on the country's ability to attract FPI. Furthermore, according to the findings of the study, the rigorous enforcement and regulatory framework of the host country has a significant impact on corporate governance practices and foreign investor protection.