A cross-national analysis of perceptions of corporate governance principles

Abstract

Increased trade between developed and emerging economies has led to a gradual convergence of policies related to corporate governance as multinational firms attempt to standardize best practices worldwide. Due in part to this movement organizations such as the OECD and World Bank have contributed to the streamlining of acceptable protocol for publicly traded firms around the globe. In 1999 the OECD Principles of Corporate Governance were endorsed by OECD ministers in an attempt to influence policymakers by setting global governance standards. Yet the extent to which perceptions of these principles vary between OECD members and non-members is unclear. Obtaining a greater understanding of how individuals from diverse nations perceive these principles is important to managers as they maneuver through the complex world of international business. In this study we employ relational demography theory to develop and test a survey instrument in the Kingdom of Saudi Arabia and in the United States to assess perceptions of OECD principles. Results from a survey of 284 managers (Saudi Arabia n=168, USA n=116) suggest that regardless of culture perceptions of shareholder rights are positively related to beliefs about the integrity of the national legal and regulatory framework. Also, differences between the Saudi and U.S. samples on perceptions of shareholder participation, disclosure and the role of the audit function are identified. Managerial implications and future research directions are also discussed.