The Role of Institutions in the Migration of Corporate Governance Practice into Emerging Economies – The Case of Africa

54 Pages Posted: 30 May 2016 Last revised: 27 Feb 2018

See all articles by Bruce Allen Hearn

Bruce Allen Hearn

University of Southampton

Lars Oxelheim

Research Institute of Industrial Economics (IFN); University of Agder; Knut Wicksell Center for Financial Studies, Lund University

Trond Randøy

University of Agder - School of Management

Date Written: May 10, 2016

Abstract

This study examines the role of institutional environment in influencing the migration of corporate governance best practice into 22 emerging African economies. Using a unique and comprehensive sample hand-collected sample of 202 IPO firms from across the continent we adopt a novel institutional logics perspective in studying the diffusion of CEO salary disclosure – a central element of corporate transparency.

Our findings reveal that the adoption of CEO salary disclosure by firms is more likely in more homogenous informal institutional contexts. Complementarities arising from disclosure originating from an Anglo-American shareholder value governance framework and indigenous formal institutions adhering to English common law infer disclosure is more likely than in contrasting civil code law contexts.

Finally firms with higher proportions of their boards of directors being drawn from indigenous social elites are less likely to disclose CEO salary – where this is reversed in the context of elevated institutional quality. Our findings are important for regulatory authorities, investors and policy makers alike who are involved in institutional improvements in emerging economies.

Keywords: Disclosure; CEO Salary; Institutional Theory; Africa; Emerging Economies; IPO

JEL Classification: G23, G38, M12, M14, M16

Suggested Citation

Hearn, Bruce Allen and Oxelheim, Lars and Randøy, Trond, The Role of Institutions in the Migration of Corporate Governance Practice into Emerging Economies – The Case of Africa (May 10, 2016). IFN Working Paper No. 1122. Available at SSRN: https://ssrn.com/abstract=2786478 or http://dx.doi.org/10.2139/ssrn.2786478

Bruce Allen Hearn

University of Southampton ( email )

University Rd.
Southampton SO17 1BJ, Hampshire SO17 1LP
United Kingdom

Lars Oxelheim (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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Sweden
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+46 8 665 4599 (Fax)

University of Agder ( email )

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Norway

Knut Wicksell Center for Financial Studies, Lund University ( email )

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Sweden
+46462228744 (Phone)

Trond Randøy

University of Agder - School of Management ( email )

Adger Research Foundation
Serviceboks 422 Bygg H
N-4604 Kristiansand
Norway
47 3814 1027 (Phone)

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