Corporate Governance, Investor Protection, and Performance in Emerging Markets
Recent research studying the link between law, and finance has concentrated on country-level investor protection measures, and focused on differences in legal systems across countries, and legal families. The authors extend this literature, and pro...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/04/1758949/corporate-governance-investor-protection-performance-emerging-markets http://hdl.handle.net/10986/14319 |
| Summary: | Recent research studying the link
between law, and finance has concentrated on country-level
investor protection measures, and focused on differences in
legal systems across countries, and legal families. The
authors extend this literature, and provide a study of
firm-level corporate governance practices across emerging
markets, and a greater understanding of the environments
under which corporate governance matters more. Their
empirical tests show that better corporate governance is
highly correlated with better operating performance, and
market valuation. More important, the authors provide
evidence showing that firm-level corporate governance
provisions, matter more in countries with weak legal
environments. These results suggest that firms can partially
compensate for ineffective laws, and enforcement by
establishing good governance, and providing credible
investor protection. The authors' tests also show that
firm-level governance, and performance is lower in countries
with weak legal environments, suggesting that improving the
legal system, should remain a priority for policymakers. |
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