Corporate governance and FDI: Firm-level evidence from Japanese FDI into the US

► We examine the effect of US corporate governance on Japanese M&A and non-M&A FDI ► Better corporate governance could discourage M&A FDI inflows ► Non-M&A FDI could be affected due to of its complementary relationship with M&A FDI ► We develop the Markov bivariate zero-inflated negative binomial regression model ► We find US corporate governance regulations explain the drop in Japanese FDI to US