On the Convergence of National Corporate Governance Systems

Abstract

Some scholars have argued that the corporate governance systems of the major economies are likely to converge towards the economically best system at a rapid pace, while others maintain that such convergence will not occur because of a variety of forms of path dependence. In this article we first describe the evolution of the different systems. Then we search for evidence that convergence of corporate governance is correlated with globalisation, i.e. governance systems will converge to a certain degree and that the fear of an "inefficient convergence" is unfounded. We do so by describing the present efforts for a unification of the corporate governance systems. The number of standards-setting bodies and multilateral institutions that have been set up in recent times to foster good corporate governance worldwide is testimony to the heightened interest in this particular issue. In addition we present arguments for a further harmonisation and weaken the theories against it. We conclude that the systems will converge because the pressure of change is stronger than the tendencies of persistence. In addition we argue that systems composed of useful elements of different systems can be optimal.

Keywords: Corporate governance, convergence, persistence

JEL Classification: G30