Foreign investors' preferences for family involvement and corporate governance: evidence from Turkey

This study examines whether firm-level governance mechanisms affect foreign holdings. Using a panel of 196 Turkish-listed nonfinancial firms over 2006 to 2010, the findings reveal that foreign investors' decisions are not affected by board structure. In addition, this study shows that foreign investors do not consider family involvement in a firm to be a potential threat, and invest in family firms when families have moderate levels of ownership. However, they are indifferent to the use of control-enhancing mechanisms by family firms. Their preference for larger firms, firms that have higher book-to-market ratio and firms that pay dividends is similar to investor preferences in developed countries.