Corruption and the ownership composition of the multinational firm at the time of entry: Evidence from Turkey

Tekin Koru A.

Journal of Economics and Finance, vol.30, no.2, pp.251-269, 2006 (Scopus) identifier


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.