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Foreign Investors as Change Agents: The Swedish Firm Experience

  • Fogel, Kathy S.

    ()

    (University of Arkansas)

  • Lee, Kevin K.

    ()

    (California State University)

  • Lee, Wayne Y.

    ()

    (University of Arkansas)

  • Palmberg, Johanna

    ()

    (Entrepreneurship Forum, CESIS, KTH)

Institutional theory suggests that informal institutions effectively constrain human behavior. Culturally embedded norms and values align corporate governance with socially acceptable outcomes. We argue that active foreign investors can act as agents of change in corporate governance. Investigating changes in ownership and control of Swedish firms, we find that active foreign investors’ participation in conjunction with a reduction of control by the largest domestic shareholder, improves firm performance through more efficient capital utilization and labor productivity. Firms move away from a Swedish stakeholder orientation toward an Anglo-American shareholder wealth maximization focus.

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Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 311.

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Length: 44 pages
Date of creation: 24 May 2013
Date of revision:
Handle: RePEc:hhs:cesisp:0311
Contact details of provider: Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/

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