Abstract
This paper examines the importance of governance transparency as a foundation of modern finance and the national institutions of effective capitalism. Governance transparency has two major components, self-dealing transparency and corporate ownership transparency. Governance transparency reduces transactions costs and reduces asymmetric information problems by reducing instances of opportunistic behavior. We examine state of the art component measures of governance transparency and find that governance transparency is a significant influence on financial architecture, equity participation, and the cost of equity. We also document the effects of national trust and financing preferences on the demand for governance transparency. This overview and review should be of much interest to firm owners, managers, scholars, and policy-makers concerned with transparency and financial and economic development.
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