Corruption and the ownership composition of the multinational firm at the time of entry: Evidence from Turkey
Journal of Economics and Finance, vol.30, no.2, pp.251-269, 2006 (Scopus)
- Publication Type: Article / Article
- Volume: 30 Issue: 2
- Publication Date: 2006
- Doi Number: 10.1007/bf02761490
- Journal Name: Journal of Economics and Finance
- Journal Indexes: Scopus
- Page Numbers: pp.251-269
- TED University Affiliated: No
Abstract
This paper presents an empirical assessment of the relationship between corruption and the ownership structure of foreign direct investment receipts by Turkey. Two forms of ownership structures are considered: joint venture and wholly owned subsidiary. The results indicate a strong negative impact of corruption on joint ventures, particularly for the ones originating from developed countries. As the degree of dissimilarity between corruption levels in the source country and Turkey diverges, the share of foreign ownership declines. This lends support to the transaction cost approach which emphasizes the expected increase in costs of sharing ownership in corrupt environments.