Corporate Governance and International Location Decisions of Multinational Enterprises

Authors


*Department of Economics, University of Groningen, PO Box 800, 9700 AV Groningen, The Netherlands. Tel: +31 50 363 6518; E-mail: l.dam@rug.nl

Abstract

This paper analyses international location decisions of corporations based on corporate governance considerations. Using firm level data on 540 Multinational Enterprises (MNEs) with 44,149 subsidiaries in 188 countries, we test whether firms with relatively good governance standards are more often located in countries with a weak governance system. We find empirical support for this hypothesis, especially for those corporations present in low-income countries.

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