Convergence of Corporate Governance: Critical Review and Future Directions

Abstract

Manuscript Type: ReviewResearch Question/Issue: Convergence in corporate governance across countries has been a subject of interest and controversy in a variety of disciplines. We attempt to address a number of related research questions: (1) what constitutes convergence? (2) what are the drivers that propel corporations in different nations towards convergence? (3) what are the major impediments that stand in the way of convergence? (4) what empirical evidence do we have to suggest that we are moving towards or away from convergence? and (5) what would be some productive avenues for further research on this topic? Research Findings/Results: Despite the vigorous intellectual position of the proponents of convergence, there is only limited evidence to indicate that such convergence is actually occurring. Even when there is ostensible convergence, much of it is convergence in form rather than substance, and governance convergence is not a context-free phenomenon. Theoretical Implications: Our review of the past literature suggests that increasing integration of product and capital markets is leading to changes in corporate governance around the world, but there is only limited evidence that such changes constitute convergence. Governance changes seem to be primarily attributable to the quest for greater efficiency in governance and enhanced legitimacy in capital markets. However, local forces such as institutional embeddedness and politics can hinder governance changes or create "hybrid" practices. Practical Implications: The ideal corporate governance may be institution-and firm-specific and an imposition of new practices or standards may not lead to intended policy or performance outcomes.

Family values and inter-institutional governance of strategic decision making in Indian family firms

“…Bconvergence^thesis (Yoshikawa & Rasheed, 2009), argues that social change and economic development in emerging economies leads to a structural separation between the family and the firm that we observe in more mature economies. Thus, we should expect this separation to result in family members exercising influence on strategy through membership on the board, while an executive team composed of professional managers formulate and execute strategy within the firm.…”

Corporate governance, accounting and finance: A review

“…It is commonly accepted that the globalisation and liberalisation of financial markets is a key contributor to the worldwide implementation of codes of CG as listed firms compete for funds (Nestor and Thompson, 2000;Khanna and Palepu, 2004;Yoshikawa and Rasheed, 2009). However, Cuervo-Cazurra and Aguilera (2004) find that openness to foreign trade has a negative influence on the speed of development of codes of good governance.…”

Strategic intent: The literature, the construct and its role in predicting organization performance

“…The limitations provide guidance on future research opportunities. There is also some discussion at present in the literature on convergence of Anglo-American and Sino corporate governance practices (Yoshikawa & Rasheed, 2009). The research propositions developed here connect corporate governance practices to symbolic management practices, an under researched area of some relevance to the strategic behaviour stream of strategic management research (Ansoff, 1987;Bower, 1996).…”