Does Foreign Investment Really Improve Corporate Governance? Evidence from Thailand

By Sudarat Ananchotikul, University of California, Berkeley
This Draft: November 1, 2006

This paper by a Thai economist about the effects of Foreign Direct Investment (FDI) in Thailand was cited last week in the Economist:

"The four authors also think that cosmopolitan capitalists can police companies and officials better than locals can. Foreign investors may have a better nose for boardroom shenanigans and a strong incentive to protect minority shareholders. A recent study of 365 firms listed on the Thai Stock Exchange by Sudarat Ananchotikul of the University of California, Berkeley, found that foreign institutional investors holding a minority stake help to ensure that the company is run for the benefit of all its owners. (That said, when foreign companies buy controlling stakes in Thai firms, they are as keen as anyone else to exploit minority shareholders, she finds.) (Source: The Economist)