Victor Z. Chen Ph.D. Candidate in Strategy Simon Fraser University

1. Foreign Direct Investment, Principal-Principal Conflicts, and Corporate Performance of Emerging Economy Firms Victor Z. Chen Ph.D. Candidate in Strategy Simon Fraser University

2. Problem to be studied • It is very difficult to prevent controlling shareholders of emerging economy firms from expropriating minority shareholders, which in turn hampers corporate performance.

3. Model Emerging Economies such as BRIC FDI [ - ] Corporate Performance PP Conflict [ - ] Major forms: Appointing unprofessional personally trusted persons on senior posts [-] Involvement in self-beneficial trades that are unbeneficial or even harmful for minority shareholders [-] Pursuit in personal, family and political agendas that hamper corporate performance [-] Pyramid building and sacrificing lower-tiers [-]

4. The world, and our western countries in particular need better understanding of emerging economies and their firms. • “we believe BRIC remain on a trajectory that will see their combined output reach 50% of the G7 level by 2020 and parity between 2030 and 2050. The economic downturn of the last 24 months has accelerated that realignment of the global economy; while growth slowed in all major regions, it has rebounded most quickly in emerging economies, widening the disparity between emerging market growth and that of developed markets.” • -- Dr. Jim O’Neill, Head of Global Economic Research at Goldman Sachs, and Father of the Idea of ‘BRIC’. With Jim in Vancouver, Fall 2009