TY - JOUR
T1 - Foreign equity portfolio flow and corruption
T2 - A cross-country evidence
AU - Kwabi, Frank
AU - Boateng, Agyenim
AU - Fosu, Samuel
AU - Zhu, Ting Ting
AU - Chijoke-Mgbame, Marian
N1 - Publisher Copyright:
© 2020 The Authors. International Journal of Finance & Economics published by John Wiley & Sons Ltd.
PY - 2022/1
Y1 - 2022/1
N2 - This study examines the impact of foreign equity portfolio investment on corruption. Employing a large dataset of 44 countries from 2001 to 2015 and three different measures of corruption, our results show that foreign investors from well-governed countries tend to foster public accountability, reduce asymmetry information and corruption. We find empirical evidence that foreign equity portfolio investment interacts with stock market development and central bank transparency to reduce corruption. Our results suggest that stock market development and central bank transparency are regarded as complementary by international portfolio investors. Further analysis indicates that corruption appears more prevalent in countries where domestic investors dominate the stock market. Our results are robust to endogeneity using dynamic generalized methods of moments (GMM). The findings suggest that attracting foreign equity investors reduces corruption, implying significant benefits for portfolio diversification.
AB - This study examines the impact of foreign equity portfolio investment on corruption. Employing a large dataset of 44 countries from 2001 to 2015 and three different measures of corruption, our results show that foreign investors from well-governed countries tend to foster public accountability, reduce asymmetry information and corruption. We find empirical evidence that foreign equity portfolio investment interacts with stock market development and central bank transparency to reduce corruption. Our results suggest that stock market development and central bank transparency are regarded as complementary by international portfolio investors. Further analysis indicates that corruption appears more prevalent in countries where domestic investors dominate the stock market. Our results are robust to endogeneity using dynamic generalized methods of moments (GMM). The findings suggest that attracting foreign equity investors reduces corruption, implying significant benefits for portfolio diversification.
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U2 - 10.1002/ijfe.2138
DO - 10.1002/ijfe.2138
M3 - Article
AN - SCOPUS:85088370801
SN - 1076-9307
VL - 27
SP - 68
EP - 87
JO - International Journal of Finance and Economics
JF - International Journal of Finance and Economics
IS - 1
ER -