TY - JOUR
T1 - Which aspects of corporate governance do and do not matter in emerging markets
AU - Black, Bernard
AU - de Carvalho, Antonio Gledson
AU - Khanna, Vikramaditya
AU - Kim, Woochan
AU - Yurtoglu, Burcin
N1 - Funding Information:
Corporate Governance Curriculum, Michigan Law School, Latin America Workshop on Law and Economics; Northwestern Law School, NYU/TAU Corporate Law Conference 2019, Oxford University, Surrey Business School, and Tel Aviv University Business School for comments. We thank Corporate Governance Forum of Turkey, Sabanci University (Istanbul) and WHU–Otto Beisheim School of Management for financial support. We are grateful to the Bovespa stock market, the Brazilian Comissao de Valores Mobiliarios, the Instituto Brasileiro de Governanca Corporativa, the (Indian) National Stock Exchange, the Bombay Stock Exchange, and the Indian Institute of Management, Bangalore for supporting our survey efforts, and to the Korea Corporate Governance Service for providing their survey results to us. De Carvalho acknowledges financial support from FAPESP (2016-06826-6).
Publisher Copyright:
© 2020 B. Black, A. G. de Carvalho, V. Khanna, W. Kim and B. Yurtoglu
PY - 2020/4/20
Y1 - 2020/4/20
N2 - Well-constructed, country-specific “corporate governance indices” can predict higher firm values in emerging markets. However, there is little credible research on which aspects of governance drive that overall relationship. We study that question across four major emerging markets (Brazil, India, Korea, and Turkey). We build overall country-specific governance indices, comprised of indices for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. Disclosure (especially financial disclosure) predicts higher market value across all four countries. Board structure (principally board independence) has a positive coefficient in all countries and is significant in two countries. The other indices do not predict firm value. These results suggest that regulators and investors, in assessing governance, and firm managers, in responding to investor pressure for better governance, would do well to focus on disclosure and board structure.
AB - Well-constructed, country-specific “corporate governance indices” can predict higher firm values in emerging markets. However, there is little credible research on which aspects of governance drive that overall relationship. We study that question across four major emerging markets (Brazil, India, Korea, and Turkey). We build overall country-specific governance indices, comprised of indices for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. Disclosure (especially financial disclosure) predicts higher market value across all four countries. Board structure (principally board independence) has a positive coefficient in all countries and is significant in two countries. The other indices do not predict firm value. These results suggest that regulators and investors, in assessing governance, and firm managers, in responding to investor pressure for better governance, would do well to focus on disclosure and board structure.
KW - Boards of directors
KW - Brazil
KW - Corporate governance
KW - Disclosure
KW - India
KW - Korea
KW - Shareholder rights
KW - Turkey
UR - http://www.scopus.com/inward/record.url?scp=85084207752&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85084207752&partnerID=8YFLogxK
U2 - 10.1561/108.00000043
DO - 10.1561/108.00000043
M3 - Article
AN - SCOPUS:85084207752
SN - 2380-5005
VL - 5
SP - 137
EP - 177
JO - Journal of Law, Finance, and Accounting
JF - Journal of Law, Finance, and Accounting
IS - 1
ER -