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Do Audit and Accounting Practices Matter for Greenfield FDI Inflows?

Author

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  • Stojanović Jovana

    (PhD student, University of Niš, Faculty of Economics, Republic of Serbia)

  • Srbinoski Bojan

    (Economic Research and Policy Institute - Finance Think, Skopje, North Macedonia)

  • Denčić-Mihajlov Ksenija

    (University of Niš, Faculty of Economics, Republic of Serbia)

Abstract

The study examines how the strength of the application of audit and accounting standards, as a component of the institutional infrastructure, affects the greenfield FDI in the four countries of the former Socialist Federal Republic of Yugoslavia over a twelve-year period (2006-2017). Using standard panel data econometric techniques, we conclude that stronger application of audit and accounting standards has a positive impact on attracting greenfield FDI, and that the strength of the application seems to be more important in stable business conditions. Our results are relevant to policy makers, as they point to the need for constant improvement in the accounting and audit system, thus encouraging better transparency and lower transaction costs for investors.

Suggested Citation

  • Stojanović Jovana & Srbinoski Bojan & Denčić-Mihajlov Ksenija, 2022. "Do Audit and Accounting Practices Matter for Greenfield FDI Inflows?," Economic Themes, Sciendo, vol. 60(1), pages 41-56, March.
    • Handle: RePEc:vrs:ecothe:v:60:y:2022:i:1:p:41-56:n:6
    DOI: 10.2478/ethemes-2022-0003
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    References listed on IDEAS

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    5. Andra Maria ACHIM (NAȘCA), 2018. "The Strength Of Auditing And Reporting Standards In Relation To Financial Reporting Quality," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 17, pages 193-197, September.
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    More about this item

    Keywords

    Greenfield foreign direct investments; audit and accounting standards; compliance; Western Balkan countries;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General

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