Improving Board Performance in Emerging Markets

McKinsey Quarterly, No. 1, 2006

9 Pages Posted: 8 May 2006

See all articles by Simon C. Y. Wong

Simon C. Y. Wong

Northwestern University School of Law; London School of Economics; Tapestry Networks

Dominic Barton

McKinsey & Co. Inc. - Tokyo Office

Abstract

The need for well-functioning boards is especially urgent in emerging markets because institutions that wish to promote good corporate behavior are often weak there. But since directors and shareholders in these regions face unique challenges, the wholesale adoption of Western corporate governance practices isn't necessarily the right answer.

Six features of emerging markets significantly influence the effectiveness of boards there: a high concentration of ownership, weak recruitment processes and a shortage of experienced directors, poor focus, an inadequate supply of information, complex cultural traditions, and underdeveloped legal regimes. Overcoming these problems and creating a vibrant and constructive board environment will probably pay off in better performance and a lower cost of capital.

Keywords: corporate governance, board of directors, emerging markets

JEL Classification: G34, G39

Suggested Citation

Wong, Simon C. Y. and Barton, Dominic, Improving Board Performance in Emerging Markets. McKinsey Quarterly, No. 1, 2006. Available at SSRN: https://ssrn.com/abstract=899920

Simon C. Y. Wong (Contact Author)

Northwestern University School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States

London School of Economics

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/collections/law/staff/simon-wong.htm

Tapestry Networks ( email )

404 Wyman St.
Suite 225
Waltham, MA 02451
United States

Dominic Barton

McKinsey & Co. Inc. - Tokyo Office ( email )

Tokyo 106-8509
Japan

Register to save articles to
your library

Register

Paper statistics

Downloads
806
Abstract Views
3,078
rank
30,258
PlumX Metrics