Abstract

The Effects of Corporate Governance on Firms’ Decisions to Internationalise

Ratnam Vijayakumaran
Durham University Business School

Corporate governance has attracted research attention in a wide variety of areas in economics,
finance, and management. There is extensive evidence relating to the relationship between
corporate governance mechanisms and performance and value of firms. However, little is known
about how corporate governance factors impact upon firms’ decisions to internationalise. For
many decades, internationalisation has been a very important phenomenon in both developed and
developing countries. Recently, there has been a rapid growth in the internationalization of firms
in transition economies such as China. Yet, the majority of firms from emerging markets are still
in the early stages of the internationalization process, Chinese firms represent a particularly
interesting case study for the effects of corporate governance, because Chinese corporations are
involved in many forms of internationalisation activities, including OFDI. Thus, in this paper we
explore the effects of corporate governance factors on Chinese firms' decisions to internationalise
their operations.