Corporate Governance and Investors' Perceptions of Foreign IPO Value: An Institutional Perspective

We build on sociology-grounded research on financial market behavior and suggest a ?nested? legitimacy framework to explore U.S. investor perceptions of foreign IPO value. We draw on a fuzzy-set theoretic approach to demonstrate how different combinations of monitoring and incentive-based corporate governance mechanisms lead to the same level of investor valuations of firms. We also argue that institutional factors related to the minority shareholder protection strength in the foreign IPO?s home country represent a boundary condition that affects the number of governance mechanisms required to achieve U.S. investors? high value perceptions. Our findings, drawn from a unique, hand-collected dataset of foreign IPOs in the U.S, contribute to the sociological perspective on comparative corporate governance and the inter-dependencies between organizations and institutions.