Convergence of Corporate Governance: Critical Review and Future Directions

17 Pages Posted: 9 Jun 2009

See all articles by Toru Yoshikawa

Toru Yoshikawa

Singapore Management University - Lee Kong Chian School of Business

Abdul Rasheed

University of Texas at Arlington - Department of Management

Abstract

The ideal corporate governance may be institution- and firm-specific and an imposition of new practices or standards may not lead to intended policy or performance outcomes.Our review of the past literature suggests that increasing integration of product and capital markets is leading to changes in corporate governance around the world, but there is only limited evidence that such changes constitute convergence. Governance changes seem to be primarily attributable to the quest for greater efficiency in governance and enhanced legitimacy in capital markets. However, local forces such as institutional embeddedness and politics can hinder governance changes or create 'hybrid' practices. Despite the vigorous intellectual position of the proponents of convergence, there is only limited evidence to indicate that such convergence is actually occurring. Even when there is ostensible convergence, much of it is convergence in form rather than substance, and governance convergence is not a context-free phenomenon. Convergence in corporate governance across countries has been a subject of interest and controversy in a variety of disciplines. We attempt to address a number of related research questions: (1) what constitutes convergence? (2) what are the drivers that propel corporations in different nations towards convergence? (3) what are the major impediments that stand in the way of convergence? (4) what empirical evidence do we have to suggest that we are moving towards or away from convergence? and (5) what would be some productive avenues for further research on this topic?

Convergence in corporate governance across countries has been a subject of interest and controversy in a variety of disciplines. We attempt to address a number of related research questions: (1) what constitutes convergence? (2) what are the drivers that propel corporations in different nations towards convergence? (3) what are the major impediments that stand in the way of convergence? (4) what empirical evidence do we have to suggest that we are moving towards or away from convergence? and (5) what would be some productive avenues for further research on this topic?

Despite the vigorous intellectual position of the proponents of convergence, there is only limited evidence to indicate that such convergence is actually occurring. Even when there is ostensible convergence, much of it is convergence in form rather than substance, and governance convergence is not a context-free phenomenon.

Our review of the past literature suggests that increasing integration of product and capital markets is leading to changes in corporate governance around the world, but there is only limited evidence that such changes constitute convergence. Governance changes seem to be primarily attributable to the quest for greater efficiency in governance and enhanced legitimacy in capital markets. However, local forces such as institutional embeddedness and politics can hinder governance changes or create 'hybrid' practices.

The ideal corporate governance may be institution- and firm-specific and an imposition of new practices or standards may not lead to intended policy or performance outcomes.

Suggested Citation

Yoshikawa, Toru and Rasheed, Abdul, Convergence of Corporate Governance: Critical Review and Future Directions. Corporate Governance: An International Review, Vol. 17, Issue 3, pp. 388-404, May 2009, Available at SSRN: https://ssrn.com/abstract=1416361 or http://dx.doi.org/10.1111/j.1467-8683.2009.00745.x

Toru Yoshikawa (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Abdul Rasheed

University of Texas at Arlington - Department of Management ( email )

Arlington, TX 76013
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
4
Abstract Views
1,976
PlumX Metrics