Enforcement and Good Corporate Governance in Developing Countries and Transition Economies
More than regulations, laws on the books, or voluntary codes, enforcement is a key to creating an effective business environment and good corporate governance, at least in developing countries and transition economies. A framework is presented to h...
| Main Authors: | , |
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| Format: | Journal Article |
| Language: | English en_US |
| Published: |
Oxford University Press on behalf of the World Bank
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2006/02/17590623/enforcement-good-corporate-governance-developing-countries-transition-economies http://hdl.handle.net/10986/16398 |
| Summary: | More than regulations, laws on the
books, or voluntary codes, enforcement is a key to creating
an effective business environment and good corporate
governance, at least in developing countries and transition
economies. A framework is presented to help explain
enforcement, the impact on corporate governance when rules
are not enforced, and what can be done to improve corporate
governance in weak enforcement environments. The limited
empirical evidence suggests that private enforcement tools
are often more effective than public tools. However, some
public enforcement is necessary, and private enforcement
mechanisms often require public laws to function. Private
initiatives are often also taken under the threat of
legislation or regulation, although in some countries
bottom-up, private-led initiatives preceded and even shaped
public laws. Concentrated ownership aligns incentives and
encourages monitoring, but it weakens other corporate
governance mechanisms and can impose significant costs.
Various steps can be taken to reduce these costs and
reinforce other corporate governance mechanisms. But
political economy constraints, resulting from the
intermingling of business and politics, often prevent
improvements in the enforcement environment and the adoption
and implementation of public laws. |
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