Corporate Governance and Development
The literature shows that good corporate governance generally pays for firms, for markets, and for countries. It is associated with a lower cost of capital, higher returns on equity, greater efficiency, and more favorable treatment of all stakehold...
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| Format: | Journal Article |
| Language: | English en_US |
| Published: |
Oxford University Press on behalf of the World Bank
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17591912/corporate-governance-development http://hdl.handle.net/10986/16395 |
| Summary: | The literature shows that good corporate
governance generally pays for firms, for markets, and for
countries. It is associated with a lower cost of capital,
higher returns on equity, greater efficiency, and more
favorable treatment of all stakeholders, although the
direction of causality is not always clear. The law and
finance literature has documented the important role of
institutions aimed at contractual and legal enforcement,
including corporate governance, across countries. Using firm
level data, researchers have documented relationships
between countries corporate governance frameworks on the one
hand and performance, valuation, the cost of capital, and
access to external financing on the other. Given the
benefits of good corporate governance, firms and countries
should voluntarily reform more. Resistance by entrenched
owners and managers at the firm level and political economy
factors at the level of markets and countries partly explain
why they do not. |
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