Journal of Law, Finance, and Accounting > Vol 5 > Issue 1

Which Aspects of Corporate Governance Do and Do Not Matter in Emerging Markets

Bernard Black, Northwestern University, USA, bblack@kellogg.northwestern.edu , Antonio Gledson de Carvalho, Fundacao Getulio Vargas School of Business at Sao Paulo, Brazil, gledson.carvalho@fgv.br , Vikramaditya Khanna, University of Michigan Law School, USA, vskhanna@umich.edu , Woochan Kim, Korea University Business School, South Korea, wckim@korea.ac.kr , Burcin Yurtoglu, WHU – Otto Beisheim School of Management, Germany, burcin.yurtoglu@whu.edu
 
Suggested Citation
Bernard Black, Antonio Gledson de Carvalho, Vikramaditya Khanna, Woochan Kim and Burcin Yurtoglu (2020), "Which Aspects of Corporate Governance Do and Do Not Matter in Emerging Markets", Journal of Law, Finance, and Accounting: Vol. 5: No. 1, pp 137-177. http://dx.doi.org/10.1561/108.00000043

Publication Date: 20 Apr 2020
© 2020 B. Black, A. G. de Carvalho, V. Khanna, W. Kim and B. Yurtoglu
 
Subjects
Corporate governance,  Disclosure
 
Keywords
JEL Codes: G18, G30, G34, G39, K22, K29
BrazilKoreaIndiaTurkeycorporate governanceboards of directorsdisclosureshareholder rights
 

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In this article:
1. Introduction 
2. Methodology 
3. Data 
4. Empirical Results 
5. Evidence on Possible Channels: Profitability and Liquidity 
6. Conclusion 
References 

Abstract

Well-constructed, country-specific “corporate governance indices” can predict higher firm values in emerging markets. However, there is little credible research on which aspects of governance drive that overall relationship. We study that question across four major emerging markets (Brazil, India, Korea, and Turkey). We build overall country-specific governance indices, comprised of indices for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. Disclosure (especially financial disclosure) predicts higher market value across all four countries. Board structure (principally board independence) has a positive coefficient in all countries and is significant in two countries. The other indices do not predict firm value. These results suggest that regulators and investors, in assessing governance, and firm managers, in responding to investor pressure for better governance, would do well to focus on disclosure and board structure.

DOI:10.1561/108.00000043