Corporate Governance in Emerging Markets : Why It Matters to Investors—and What They Can Do About It

What should investors do when scholarly research on corporate governance in emerging markets does not provide conclusive evidence on which aspects of governance matter most across all the emerging markets and how they affect firm performance? A researcher and a practitioner team up to offer guidelines and recommendations that focus on board independence and business group affiliation. Every day, institutional investors in emerging markets must make practical decisions on the basis of incomplete and at times conflicting information. So, it is critically important that they make the best use of this imperfect knowledge. Moreover, investors too often enter emerging markets with misguided perceptions of the underlying realities. And worse, they may cling to a conceptual framework of governance that does not allow them even to consider the searching questions they should be asking. This Private Sector Opinion, by the authors, explicitly highlights this problem. The authors identify a serious gap in research on emerging markets between high-level cross-country studies, with their inconclusive findings on good governance indicators at the macro level, and the separate effort to establish firm-level or country-specific governance metrics, typically based on what works 'in the West.' Unfortunately, less than one percent of the research papers available on corporate governance focus on emerging markets.

Bibliographic Details

Main Authors:	Ararat, Melsa, Dallas, George
Language:	English
Published:	World Bank, Washington, DC 2011-01
Subjects:	ACCOUNTING, ACCOUNTING STANDARDS, AGENCY COSTS, AGENCY PROBLEM, ASSET GROWTH, ASSET MANAGEMENT, AUDIT COMMITTEE, BOARD MEETINGS, BOARD MEMBERS, BOARDS OF DIRECTORS, BONDHOLDERS, BRIBERY, BUSINESS ETHICS, BUSINESS LAWYER, CAPITAL MARKET, CAPITAL MARKETS, CAPITAL RATIO, CARBON DISCLOSURE, CASH FLOW, CEO, CEOS, CHARTERED ACCOUNTANTS, CHECKS, CHIEF EXECUTIVES, COMPANY LAW, COMPARATIVE CORPORATE GOVERNANCE, CONFLICTS OF INTEREST, CONTROLLING SHAREHOLDER, CONTROLLING SHAREHOLDERS, CORPORATE BEHAVIOR, CORPORATE BOARDS, CORPORATE CULTURE, CORPORATE FINANCE, CORPORATE GOVERNANCE, CORPORATE GOVERNANCE CODES, CORPORATE GOVERNANCE MECHANISMS, CORPORATE GOVERNANCE REFORM, CORPORATE GOVERNANCE STANDARDS, CORPORATE OWNERSHIP, CORPORATE SOCIAL RESPONSIBILITY, CORPORATE TRANSPARENCY, CORPORATIONS, CORRUPT PRACTICES, CORRUPTION, COUNTRY TO COUNTRY, CREDITORS, CRITICAL MASS, DERIVATIVE, DEVELOPING COUNTRIES, DIRECTOR INDEPENDENCE, DIVERSIFIED PORTFOLIO, DOMESTIC COMPANIES, DUMMY VARIABLE, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ECONOMIC PERFORMANCE, EMERGING ECONOMIES, EMERGING MARKET, EMERGING MARKET COMPANIES, EMERGING MARKET FIRMS, EMERGING MARKETS, EQUITY INVESTORS, EQUITY PRICES, EXPROPRIATION, FAMILY BUSINESS, FAMILY FIRM, FAMILY FIRMS, FINANCE CORPORATION, FINANCIAL CAPITAL, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL MARKET, FINANCIAL MARKET DEVELOPMENT, FINANCIAL MARKETS, FINANCIAL STATEMENTS, FINANCIAL STUDIES, FINANCIAL VOLATILITY, FIRM PERFORMANCE, FIRM STRUCTURES, FIRM-LEVEL CORPORATE GOVERNANCE, FIRM-LEVEL GOVERNANCE, FRAUD, GLOBAL CORPORATE GOVERNANCE, GLOBAL ECONOMY, GLOBAL GROSS DOMESTIC PRODUCT, GLOBAL INVESTOR, GLOBAL PRIVATE SECTOR, GOOD GOVERNANCE, GOVERNANCE ARRANGEMENTS, GOVERNANCE CHALLENGE, GOVERNANCE INDEXES, GOVERNANCE INDICATORS, GOVERNANCE ISSUES, GOVERNANCE MECHANISM, GOVERNANCE MECHANISMS, GOVERNANCE PRACTICES, GOVERNANCE RESEARCH, GROUP COMPANIES, GROUP OF INVESTORS, GROWTH RATE, HOLDING, HOLDING COMPANY, HUMAN CAPITAL, ILLIQUIDITY, INCENTIVE STRUCTURES, INCOME, INDEPENDENT BOARDS, INDEPENDENT DIRECTORS, INDEPENDENT OVERSIGHT, INDIVIDUAL COMPANIES, INDIVIDUAL INVESTORS, INFORMATION ASYMMETRY, INFORMATION FLOWS, INSIDER TRADING, INSTITUTIONAL FRAMEWORK, INSTITUTIONAL INVESTOR, INSTITUTIONAL INVESTORS, INSURERS, INTERESTS OF MINORITY SHAREHOLDERS, INTERNATIONAL BUSINESS, INTERNATIONAL BUSINESS TRANSACTIONS, INTERNATIONAL CORPORATE GOVERNANCE, INTERNATIONAL FINANCE, INTERNATIONAL INVESTORS, INVESTIGATION, INVESTMENT DECISIONS, INVESTMENT POLICIES, INVESTOR CONFIDENCE, INVESTOR PERSPECTIVE, INVESTOR PROTECTION, INVESTOR PROTECTIONS, INVESTOR RISKS, JOURNAL OF CORPORATION LAW, JURISDICTIONS, LABOR MARKET, LABOR MARKETS, LAW ENFORCEMENT, LEGAL INFRASTRUCTURES, LEGAL REGIMES, LEGAL SYSTEMS, LIEN, LIMITED, LIQUIDITY, LOAN, LOCAL INSTITUTIONS, MAJORITY SHAREHOLDERS, MANAGERS, MARKET COMPETITION, MARKET DOWNTURNS, MARKET GOVERNANCE, MARKET PRICE, MARKET VALUE, MINORITY INTERESTS, MINORITY INVESTOR, MINORITY INVESTORS, MINORITY OWNER, MINORITY SHAREHOLDER, MINORITY SHAREHOLDERS, MONETARY FUND, OWNERSHIP CONCENTRATION, OWNERSHIP STRUCTURE, OWNERSHIP STRUCTURES, PARTY, POLITICAL ECONOMY, POLITICAL INSTITUTIONS, POLITICAL INTERFERENCE, PORTFOLIO, PORTFOLIO HOLDINGS, PORTFOLIO INVESTMENT, PROXY, PROXY VOTING, PUBLIC COMPANIES, PUBLIC GOVERNANCE, PUBLIC OFFICIALS, REGULATORS, REGULATORY QUALITY, REPAYMENT, RETURN, RETURN ON ASSETS, RISK FACTOR, RULE OF LAW, SALES GROWTH, SAVINGS, SHAREHOLDER, SHAREHOLDER ACTIVISM, SHAREHOLDER VALUE, SHAREHOLDER VOTES, SHAREHOLDERS, SOCIETIES, SOCIETY, STOCK RETURNS, SUBSIDIARIES, SUBSIDIARY, SUSTAINABLE INVESTMENT, TAX, TRANSACTION, TRANSACTION COSTS, TRANSITION ECONOMIES, TRANSPARENCY, TRUST FUND, VALUATION, VALUATIONS, WEAK CORPORATE GOVERNANCE, WEAK CORPORATE GOVERNANCE SYSTEMS,
Online Access:	http://documents.worldbank.org/curated/en/2011/01/15107565/corporate-governance-emerging-markets-matters-investors-can https://hdl.handle.net/10986/11071
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