Impact of Corporate Governance Practices on Foreign Direct Investments (FDI) from a UAE Legislative Landscape

Foreign direct investments (FDIs) are instrumental in spurring economic growth and development. However, FDI inflows depend on existing corporate governance (CG) systems and practices. The United Arab Emirates (UAE) has a robust CG framework driving FDI inflows into the country. Relaxing foreign ownership in UAE onshore companies has liberalized the FDI market, allowing more foreign investors to invest in the country. Nonetheless, foreign investors are increasingly being forced to navigate a complex legal landscape including federal laws and emirate-specific regulations. Thus, this research explored the impact of CG practices on FDI inflows into the UAE. This research involved a narrative literature review to analyse and summarize existing research evidence critically. This study has established a positive relationship between CG practices and FDI inflows into the UAE. Three CG practices emerged from this research: ownership structures; transparency and disclosure; and ethical business conduct. These practices mediate the relationship between CG and FDI inflows. Research findings have also shown that inconsistent legal frameworks could undermine investment efficiencies as foreign investors struggle to navigate complex laws and legislation. Therefore, a harmonized CG legal framework is necessary to streamline FDI inflows into the country. The UAE currently has diverse legal frameworks with each governing specific CG elements. Harmonization will provide a consistent regulatory environment to reduce transaction costs and enhance trust among investors regarding their rights and protections.