The Direction of Future Research in Corporate Governance

21 Pages Posted: 28 Mar 2012 Last revised: 6 Apr 2012

See all articles by Santosh Pande

Santosh Pande

Thought Arbitrage Research Institute

Date Written: March 27, 2012


Despite the very strong intuitive and instinctive belief in the principle that ‘good governance leads to good governance’ and a number of opinion surveys re-affirming the confidence of investors in good governance so far there has been no conclusive evidence, based on empirical research, confirming the causality of this relationship.

This paper reviews the status of corporate governance research across the globe and identifies three serious challenges that are faced by researchers in this field - given that governance is a soft issue that is not best captured by quantitative and structural factors alone, the first major challenge is to define the correct measure(s) for good governance that would capture all the facets of governance. The second major challenge in corporate governance research has been the fact that the focus of most such research efforts has been to evolve a universal standard for governance that all organizations must strive for and the related attempts, by researchers, to measure governance in organizations against this universal standard. Adopting such an approach of ‘one size fits all’ to corporate governance research has been self limiting and inappropriate. The third significant challenge to corporate governance research is the inference of causality, between good governance and good performance, which has been made in many research studies and which, more often than not, is based either on flawed methodology or an incomplete modeling of the various factors that underlie corporate governance.

Notwithstanding the fact that conclusive evidence has yet not been obtained that establishes causality between good governance and good performance, it does not imply that such a causal relationship does not exist; all it means is that corporate governance research, so far, has not been able to identify such a relationship and points to the need for more detailed and in-depth research in this field. Specifically, given that the quality of corporate governance involves many soft factors which, most of the times, are not amenable to quantitative measurement it would be worthwhile to undertake greater qualitative research in this area so as to better understand the various factors that affect corporate governance and establish causality between corporate governance and corporate performance.

There is also the need for further development of theory in the area of corporate governance as that would lead to developing more holistic and robust models for corporate governance in organizations which could be tested empirically and form the basis for more effective policy formulation This paper identifies the direction for such future research which should become the basis for guiding the next generation of effective corporate governance reforms.

Keywords: Corporate Governance, Firm Performance, Measuring Governance, Governance Standard, Causality, Future Governance Research

Suggested Citation

Pande, Santosh, The Direction of Future Research in Corporate Governance (March 27, 2012). Available at SSRN: or

Santosh Pande (Contact Author)

Thought Arbitrage Research Institute ( email )

C-16, Qutab Institutional Area,
New Delhi, New Delhi 110016


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