Are Foreign Donors Good Monitors?
Economic and accounting literature has long found that foreign investments provide a multitude of benefits to local stock markets and economies. Foreign inflows to for-profit firms are found to harvest not only capital but also managerial and marketing skills in addition to business connections and human resource development. For-profit foreign institutional investors have also been documented as improving firm performance, corporate governance, firm value, and corporate transparency. For example, prior research has shown that for-profit firms with international institutional investors have better corporate governance practices, suggesting that governance travels around the world with these institutional investors. Despite this, little is…
