Corporate governance practices and foreign direct investment: the case of Nigerian listed companies

Abstract

This paper investigates the relationship between corporate governance practices and foreign direct investment on a sample of 186 listed companies in Nigeria for a period of six years from 2008-2010 and 2012-2014. The two distinct periods represent the pre and post-corporate governance review periods in Nigeria. The study commenced with the measurement of corporate governance quality through construction of corporate governance index from the publicly disclosed information in financial statements. Foreign direct investment data was obtained by calculating the percentage of the share holds by the foreign investors (institutions and individuals) on the total quoted share for each of the listed company in Nigeria. The data were subjected to various statistical analysis such as descriptive statistics, univariate t-statistics and multivariate regression analysis. The findings of this study revealed that corporate governance has a significant impact on the inflow of foreign direct investment into the Nigeria stock market. Therefore, the policy implication of these findings is that listed companies in Nigeria need an improvement on their corporate governance practices to attract more funds from foreign investors into the Nigeria economy.