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Perspectives on Comparative Corporate Governance


Ruth V. Aguilera


University of Illinois College of Law; University of Illinois at Urbana-Champaign - Department of Business Administration

Kurt A. Desender


Universidad Carlos III de Madrid

Luiz Ricardo Kabbach-Castro


Universitat Autònoma de Barcelona

March 12, 2012

SAGE HANDBOOK OF CORPORATE GOVERNANCE, Clarke, T. and D. Branson, eds., New York: Sage Publications, Forthcoming

Abstract:     
We seek to bring to the core of the study of comparative corporate governance analysis the idea that within countries and industries, there exist multiple configurations of firm level characteristics and governance practices leading to effective corproate governance. In particular, we propose that configurations composed of different bundles of corporate governance practices are a useful tool to examine corporate governance models across and within countries (as well as potentially to analyze over time changes). While comparative research, identifying stylized national models of corporate governance, has been fruitful to help us think about the key institutional and shareholder rights determining governance differences and similarities across countries, we believe that given the financialization of the corporate economy, current globalization trends of investment, and rapid information technology advances, it is important to shift our conceptualization of governance models beyond the dichotomous world of common-law/outsider/shareholder-oriented system vs. civil law/insider/stakeholder oriented system. Our claim is based on the empirical observation that there exists a wide range of firms that either (1) fall in the "wrong" corporate governance category; (2) are a hybrid of these two categories; or (3) should be placed into an entirely new category such as firms in emerging markets or state-owned firms.

In addition, as Aguilera and Jackson (2003) argue, firms, regardless of their legal family constraints, their labor and product markets, and the development of the financial markets from which they can draw, have significant degrees of freedom to chose whether to implement different levels of a given corporate governance practice. That is, firms might chose to fully endorse a practice or simply seek to comply with the minimum requirements without truly internalizing the governance practice. An illustrative example of the different degrees of internalization of governance practices is the existing variation in firms’ definition of director independence or disclosure of compensation systems.

We first discuss the conceptual idea of configurations or bundles of corporate governance practices underscoring the concpet of equifinal paths to given firm outcomes as well as the complementarity and substitution in governance practices. We then move to the practice level of analysis to show how three governance characteristics (legal systems, ownership and boards of directors) cannot be conceptualized independently, as each of them is contingent on the strength and prevalence of other governance practices. In the last section, we illustrate how different configurations are likely to playout across industries and countries, taking as the departing practice, corporate ownership.

Number of Pages in PDF File: 27

Keywords: corporate governance, comparative, international, bundle, configurational

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Date posted: March 29, 2011 ; Last revised: March 13, 2012

Suggested Citation

Aguilera, Ruth V. and Desender, Kurt A. and Kabbach-Castro, Luiz Ricardo, Perspectives on Comparative Corporate Governance (March 12, 2012). SAGE HANDBOOK OF CORPORATE GOVERNANCE, Clarke, T. and D. Branson, eds., New York: Sage Publications, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1797142 or http://dx.doi.org/10.2139/ssrn.1797142

Contact Information

Ruth V. Aguilera (Contact Author)
University of Illinois College of Law ( email )
504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
University of Illinois at Urbana-Champaign - Department of Business Administration ( email )
1206 South Sixth Street
Champaign, IL 61820
United States
217-333-7090 (Phone)
217-244-7969 (Fax)
Kurt A. Desender
Universidad Carlos III de Madrid ( email )
Calle de Madrid, 123
Getafe, 28903
Spain
Luiz Ricardo Kabbach-Castro
Universitat Autònoma de Barcelona ( email )
Campus Bellaterra
Barcelona, 08193
Spain
HOME PAGE: http://demo.uab.cat
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