DOES HOME COUNTRY INSTITUTIONAL QUALITY MATTER FOR FOREIGN ASSET DIVESTITURES?

Foreign divestments have become a regular feature of global investment patterns. These divestments have mainly been explained by changes in the economic and institutional factors of the host countries. Recently, as institutional quality has improved in emerging economies, perceived risks have decreased and divestments can no longer be fully explained by host country factors. This paper examines the effects of a firm's home country institutional quality on its divestment decisions in foreign markets. It also studies whether these factors affect developed and developing host countries differently during normal and crises years.