Corporate Governance Convergence Research Articles

Green finance and high-pollution corporate compensation - Empirical evidence from green credit guidelines

With the increasing focus on Environmental, Social, and Governance (ESG) and Corporate Social Responsibility (CSR) on a global scale, stakeholders expect businesses to transform and enhance social responsibility. Over time, ESG and CSR have developed into vital performance metrics for businesses. Businesses are actively putting improvement measures into place in response to this new paradigm in order to stay competitive in this changing environment. China's dual commitment to CSR and sustainable development is in line with wider objectives, such as resolving issues of pay inequality. In 2012, the China Banking Regulatory Commission (CBRC) unveiled the “Green Credit Guidelines” (GCG), which take corporate governance's environmental considerations into account. These regulations set standards and specifically target high-pollution corporations. Companies may need to restructure their corporate structures and create efficient governance mechanisms in order to comply with these regulations and reduce carbon emissions. This will have an impact on the compensation packages of executives and regular employees.The most important question is how the “GCG” will affect the wage disparity in highly polluting companies. This study examines the 2012 “GCG” and its potential to reduce internal wage disparities, viewing it as a critical element of green financial policy. The paper uses data from Chinese A-share listed companies from 2007 to 2020. Besides, it uses the Difference-in-Differences method to assess the impact of China's GCG, treating its implementation as a quasi-natural experiment and controlling for concurrent policy effects to precisely identify its net impact on corporate carbon emissions and internal wage disparities.The findings show that “GCG” considerably closed internal wage disparities. Furthermore, the “GCG” has a path of guidance, incentives, and punishments that reduce internal wage disparities and promote a more equitable wage distribution within businesses. According to heterogeneity analysis, policies have a greater impact on the wage gap in businesses that are highly dependent on outside funding and have political connection. In order to achieve a compensation balance and meet the objectives of social responsibility and corporate sustainable development, the government should strengthen the complementary effects of green financial policies.The compensation balance in highly polluting companies has important theoretical and practical ramifications. On the one hand, it represents the convergence of income equality, corporate governance, and environmental responsibility. It helps to expand knowledge of sustainable development, fair compensation, and environmental policies. On the other hand, the widening pay disparity between executives and average employees reflects the exacerbation of income inequality in China, which could potentially impact companies' long-term development. Conversely, a well-balanced pay plan can improve worker productivity and motivation while empowering stakeholders to make wise investment choices.

Rippling effect of corporate governance and corporate social responsibility synergy on firm performance: The mediating role of corporate image

There is a lack of consensus on how corporate governance and CSR relationships manifest across different institutional contexts especially within emerging economies, despite the wealth of available studies on the two concepts. The purpose of this study is to examine the relationship between corporate governance and corporate social responsibility as well as their effect on the performance of manufacturing firms via corporate image. The quantitative approach was used to collect data from a sample of 328 top executives of selected manufacturing firms in Ghana using the purposive sampling technique. The data collected was analyzed using AMOS and Process Macro. The study found that corporate governance has a high tendency to catalyze corporate social responsibility performance. The study further revealed that good corporate governance practices enhance both corporate image and performance of firms. Corporate social responsibility was also found to have a significant positive relationship with both corporate image and performance of manufacturing firms. The study further illuminated that corporate governance and corporate social responsibility have an indirect effect on firm performance through corporate image. The study has demonstrated how corporate governance and corporate social responsibility synergistically impact the performance of manufacturing firms. The study helps advance knowledge on the synergy and convergence of CSR and corporate governance interfaces and offers rich insight into the corporate governance and CSR puzzles within the context of the emerging economy.

Cross-listing and noncompliance with the mandatory CSR expenditure regulation

PurposeIn this paper, the authors examine the relation between cross-listing and the noncompliance with the mandatory corporate social responsibility (CSR) expenditure regulation in India, the first country to legally mandate the CSR expenditure.Design/methodology/approachThe authors apply panel logit and ordinary least square (OLS) regression models to examine the impact of cross-listing on the noncompliance with the mandatory CSR expenditure regulation because panel regression has lesser multicollinearity problems and has the benefit of controlling for individual or time heterogeneity mostly present in cross-section or time series data.FindingsUsing a sample of 1,027 listed Indian firms, the authors show that the cross-listed firms are more likely to comply with the mandatory CSR expenditure than non-cross-listed firms. The authors further show that this relation holds only for those firms which are exposed to higher agency problems, for firms affiliated to business groups and for firms operating in high litigation risk industries. Finally, the authors show that cross-listed firms complying with the mandatory CSR expenditure command more valuation premiums.Practical implicationsThis study’s results suggest that the noncompliance of the Indian firms with the mandatory CSR expenditure regulation comes down once they cross-list their shares in the US or the UK since such firms have to bond to the stronger corporate governance standards of the listed country. Hence, the authors recommend that merely making the investment in CSR activities mandatory may not serve the purpose and the convergence in corporate governance as well as compliance with the CSR expenditure can be achieved through cross-listing in US and UK markets.Originality/valueOne, the authors analyze the effect of cross-listing on the likelihood and magnitude of noncompliance with the CSR mandate. Two, this study is based in India where CSR expenditure has been made mandatory under the Companies Act, 2013. Using CSR mandate as a natural experiment, the authors have access to a richer data set on CSR in terms of the actual expenditure made by the company on CSR activities and the mandatory amount to be spent in a particular year.

Convergence and compliance of corporate governance codes: a study of 11 Asian emerging economies

PurposeThe purpose of this paper is twofold. The first is to explore the convergence of corporate governance (CG) codes of 11 Asian emerging economies with the United Nations (UN) CG guidelines (United Nations Conference on Trade and Development ISAR benchmark). The second is to find the compliance level of firms in each country with the UN CG guidelines.Design/methodology/approachBased on the 2017 GDP growth rate, the top 11 emerging economies were selected. CG codes of each country were then analyzed by using content analysis to find the convergence level with the UN CG guidelines. To find the compliance level of individual firms in each sample country, a sample of the top 15 non-financial listed firms were selected from each country, and their annual reports were analyzed. The binary scoring method was used.FindingsAfter analyzing the 11 national CG codes, 1 UN CG guidelines and 150 annual reports, this study found that Pakistan and Philippines CG codes have the highest level of convergence toward the outsider model recommended by UN CG guidelines, whereas China and India have the lowest compliance score. The Indian, Chinese, Malaysian and Indonesian listed firms showed more compliance toward the UN CG guidelines than their respective national CG codes.Originality/valueBy analyzing the top 11 emerging economies, and top 15 listed enterprises in each country, this study offered a combined convergence and compliance evidence at two different levels, i.e. country and firm-level. This study’s findings would be equally helpful for regulators, policymakers and investors in assessing their country’s CG codes against the international recommended best practices.

Convergence of corporate governance in state-owned enterprises: A case study in an emerging market using OECD Guidelines

This article investigates an under-researched area of government activity and corporate governance reform, namely, corporate governance in state-owned enterprises. State-owned enterprises (SOEs) form a significant part of the economy in many countries and particularly in Asia. This article contributes to the larger corporate governance convergence debate by investigating whether arrangements originally conceptualised in the private sector prior to going global have indeed gone global and extended into the public sector. The article approaches the problem by investigating three interrelated questions posed by Clarke (2011): whether convergence could occur, whether it is occurring and whether such convergence is a good thing. Using a combination of DiMaggio and Powell’s (1983) institutional framework, convergence theory and doctrinal methods, the article sets the Organisation for Economic Co-operation and Development (OECD) Guidelines on Corporate Governance of State-Owned Enterprises as a benchmark and assesses Philippine state-owned enterprise law and practices. The analysis revealed a high level of convergence. We find evidence that convergence was occurring by a series of high-level dialogues, that it was open and sufficiently non prescriptive to allow selective adoption and adaptation to local context. In evaluating the convergence, we believe that the benefit to the overall welfare of the Philippines outweighed the drawbacks

LAYAKKAH MODEL SHAREHOLDER DAN STAKEHOLDER DITERAPKAN DI INDONESIA?

Corporate governance is an important thing in succeeding the vision of the mission and the future of the company. The systematic governance of each company varies due to differences in the character and culture of a country. However, each model still has weaknesses so that currently some of the researchers are researching the convergence between corporate governance models.. Therefore, this paper discusses various models of corporate governance such as stakeholder, shareholder and continental models as well as the concept of corporate governance convergence. The purpose of writing this paper first, to know the characteristics of each model as well as how much influence the concept of corporate governance convergence. After successfully exceeding the first goal researchers are also interested to know what is the right corporate governance model to applied on the industry in Indonesia. The method used in writing this paper uses literature studies that use the technique of collecting data library or literature that has been available to be studied and processed as research materials in accordance with the theme.

Investor protection: effects of takeover convergence

PurposeTakeovers play a critical role as an external corporate governance mechanism to ensure investor protection. There is a long-standing debate on whether the convergence of corporate governance to global standards can enable emerging economies to ensure investor protection. This paper aims to analyse the evolution of the takeover code, namely, Securities Exchange Board of India’s Substantial Acquisition of Shares and Takeovers (2011) in India from the lens of investor protection. It then compares the takeover provisions in India, the USA, the UK, Singapore and Australia to examine the extent of convergence and its implications for investor protection.Design/methodology/approachUsing a cross-national comparative analysis of takeover mechanisms in common law countries, the study analyses the extent and relevance of convergence in form. The focus of the comparison is on regulations governing offer size, offer price, creeping acquisition and initial trigger limit for the mandatory open offer.FindingsThe findings suggest that certain provisions such as the initial trigger threshold for the mandatory offer and the offer prices of the Indian takeover code are converging with the standards in common law countries. However, the offer price determination based on market prices may not reflect true market value in an inefficient market like India. Other provisions such as creeping acquisition and offer size are not only diverging from the international standards but are also inconsistent with the key objective of investor protections of the Indian regulator.Research limitations/implicationsIndian takeover regulation needs to converge to higher global standards to ensure adherence to improved investor protection. This needs to be done for the initial trigger limit for mandatory bid and offer prices, after accounting for the differences in institutional structure. The Indian regulators need to revisit provisions on the initial trigger, creeping acquisition to converge to the broader principle of investor protection.Originality/valueThis technical paper provides a comprehensive depiction of takeover mechanisms in an emerging economy context as a means of investor protection. Further using a comparative lens, it analyses the relevance of convergence of takeover laws. Thus, advances the theoretical knowledge of limited extant work on external corporate governance mechanism in an emerging economy context.

Transnational Migration of Laws and Norms in Corporate Governance: Fiduciary Duties and Corporate Codes

This paper explores the intersection of transnational law with contemporary corporate governance laws and principles. Transnational law, it must be said, is a far from settled concept. There is uncertainty as to what the term actually means, and how it differs from other concepts, such as national legal ordering or global law. For early theorists, the essence of transnational law was whether it regulated conduct or events that crossed national boundaries. More recent scholarship, however, has focused not on what is being regulated, but rather on how laws and norms are transmitted between supranational and local levels.Corporate governance, with its complex array of public and private actors, fits naturally within the modern conception of transnational law as a species of law that “can no longer be viewed through a purely national lens”. Financial markets today are global and interconnected and events, such as the 2007-2009 global financial crisis and the current COVID-19 crisis, exemplify the risk of contagion across those markets.Not only can corporate governance problems transcend national boundaries, so too can their solutions, which often involve regulatory efforts that operate at a transnational level. In this environment, the corporation has taken on a greater societal role. Indeed, according to The British Academy’s influential Future of the Corporation project, the main purpose of business today is “to solve the problems of people and planet profitably”.This paper explores, from a transnational perspective, the transmission of laws and norms that are designed to constrain directors’ conduct and enhance corporate accountability. It focuses on two key examples of such accountability mechanisms —fiduciary duties and corporate codes.The paper begins with a comparative and historical examination of directors’ fiduciary duties in the United States, the United Kingdom and Australia, analyzing the extent to which the transfer of fiduciary law to these common law jurisdictions has resulted in a unified approach to directors’ duties, as is often assumed by studies such as the law matters hypothesis. The paper then moves on to discuss the modern phenomenon of codes, such as corporate governance codes and shareholder stewardship codes. Corporate codes originated in the United Kingdom in the early 1990s, but have subsequently spread throughout the world. The paper explores the global transmission of these codes, which constitute powerful “norm creators”. The rise of corporate codes epitomizes the fact that transnational legal ordering occurs “multi-directionally and recursively up from and down to the national and local levels”. It also demonstrates the importance of “who writes the rules”, because this can affect the substance of those rules and result in significant divergence between national codes.The paper assesses these various developments against the backdrop of convergence and path dependence theories in corporate governance.

Research Handbook on Comparative Corporate Governance: Introduction

This chapter introduces the Research Handbook on Comparative Corporate Governance and surveys several of the central themes addressed in the book. Most corporate governance research deals with the interaction between board members, officers, and shareholders, primarily in large, publicly traded corporations. Considerable volumes of literature thus are preoccupied with reducing conflicts of interest between shareholders and management, and consequently minimizing agency cost, thus vindicating the narrow finance perspective. Given the predominance of controlling shareholders around the globe, the literature increasingly focuses acutely on conflicts between controlling and minority shareholders. In a comparative or international context, research also often addresses all groups whose interests are affected by corporate activities and who have some degree of influence on corporations, such as creditors and employees. The book attempts to take a broad perspective. It deals with interactions between boards and shareholders, as well as minority and controlling shareholders. We cover legal duties and their enforcement, as well as the balance of powers generated by the institutional setup. Nevertheless, the interests of other “stakeholders” are very much present. The authors also explore corporate purpose, including short-termism, corporate social responsibility (CSR) and environmental, social and governance (ESG) issues. In addition, the book tackles key debates in the field, including the significance of legal origins for the development of corporate law, convergence in corporate governance, and the appropriate choice of research methods in comparative corporate governance scholarship.

Accounting and Convergence in Corporate Governance: Doctrinal or Economic Path Dependence?

Convergence in corporate governance has been debated for more than 20 years. This paper seeks to explain convergence – and the lack thereof – in accounting laws and standards, within the context of this debate. One could argue about whether accounting has undergone international convergence. One the one hand, the two major accounting systems, IFRS and US GAAP, share the same goal of providing timely and useful information to investors. On the other hand, differences between the two sets of standards remain, and the SEC still does not permit domestic issuers to use IFRS. Moreover, while EU publicly-traded firms are required to use IFRS for their consolidated financial statements, many Member States, continue to require or permit the use of domestic accounting standards for private firms and for entity-level accounting. This paper seeks to explain this persistent divergence with path dependence. Path dependence is often driven by interest groups. However, there is also the possibility of doctrinal path dependence, which can be explained with the difficulty of making fundamental changes given that legal professionals aim for certain and seek to preserve the value of their specialized human capital. A major factor in accounting reform are the interests of accounting professionals, particularly in large international firms (the “Big 4”). Divergence may in part be because the interests of this key constituency differ between the US and Continental European countries. In Europe, the internationalization of accounting has generally been favored by large firms because of the possibility of increasing their market share at the expense of purely domestic firms. This explains the compromise implemented in the Member state options of the IFRS Regulation. By contrast, the US already had a fully developed set of accounting standards focused on capital markets when IFRS became an option, which means there were no rents to capture for large firms as a result of changes in the audit market. In addition, a key feature of US corporate governance distinguishes it from other systems, including the UK, namely the prevalence of investor litigation. Consequently, a rules-based system serves the interest of the accounting profession better than the arguably more standards-based IFRS.

Convergence in Corporate Governance: The Case of China and India

China and India are faced with similar challenges to maintain the aggressive rates of economic growth. While both countries attained economic independence in the late 1940s, each followed a different course in terms of growth. China preferred to open up its economy to FDI much earlier and only in recent times, has it turned towards domestic capital. India, on the other hand, began by attempting to develop local talent and shifted its focus to foreign participation in 1991. This paper examines the politico-economic background and the resultant corporate governance paths undertaken by each of these countries. We find that these paths, while diverse, lead to a convergence. In particular, given the nature of concentrated shareholdings in Chinese and Indian companies, by the State and family promoters in China and India respectively, the second agency problem and the requisite protection of minority shareholders assumes considerable importance in both jurisdictions. However, given the nature of corporate governance norms having being transplanted from advanced to emerging economies, this convergence may not be suitable or even desirable. This paper posits that emerging economies such as China and India ought to develop and implement corporate governance norms that are separate from advanced economies to combat the unique issues arising out of shareholding patterns at home.

Diversity of Shareholder Stewardship in Asia: Faux Convergence

Since the UK adopted the world’s first stewardship code in 2010, stewardship codes have proliferated across Asia. Given the UK Code’s prominence, it is tempting to assume that every other stewardship code preforms the same function as the UK Code. This assumption belies the truth: all these codes – regardless of whether they have in fact drawn inspiration from the UK Code – have taken different trajectories due to each adopting jurisdiction’s distinctive institutional and legal context. Using empirical evidence and in-depth case studies of stewardship in Japan and Singapore, this article reveals how any reception of UK-style stewardship concepts is only skin-deep. Even where the text of stewardship codes in Asia resemble the UK Code in form, their functional impact on corporate governance significantly depart from, or even run counter to, the intended functions of the UK Code. The article illustrates how stewardship codes in Asia have been used as a convenient vehicle for local governments and/or market players to achieve their own particular interests through an inexpensive, non-binding, and malleable vehicle, the formal adoption of which sends a signal of “good corporate governance” to the rest of the world. While such practices explain and contextualize the widespread adoption of stewardship codes in Asia, they also compound the challenge of drawing positive or normative conclusions from this development. The observation advanced in this article is important as leading corporate governance scholars, prominent international organizations, and market participants, have appeared content to draw such conclusions unaware that stewardship codes generally do not fulfill a similar function to the UK Code in Asia. The article concludes by explaining how adopting globally recognized mechanisms of “good corporate governance” at a superficial formal level, and then altering their function to serve local purposes, appears to be a rising trend in corporate governance in Asia (and elsewhere). This phenomenon, which we coin “faux convergence”, calls for the re-examination of important and impactful theories about corporate governance convergence. As an initial foray, this article develops an expanded taxonomy of corporate governance convergence and lays the foundation for future research on “faux convergence”.

Global Financial Crisis and State’s Social-Economic Differences – a Deterrent to Corporate Governance Convergence?

Various socio-economic incidences have placed a strain on the abilities of global organization to effectively implement a corporate convergence, the challenge that continues to have impact on the cross-border business transactions. Couple with the Enron, World-Com, Pamlat, Nortel Networks and many other financial scandals that plagued multinationals, each nation has kept mum on the convergence of corporate governance systems rather, they have implemented a divergent approach that encourages individualism over collectivism. The actions of the European Union through the International Financial Corporation has focused on establishing directives to enhance transparency, for greater shareholder engagement and to support company growth and competitiveness. Other programs and institutions were launched to further support effective corporate governance across European union countries. Organization of Economic and Community Development (OECD), Basel Committee for Banking (BCBS), EU developments, Investor developments, Accounting, Audit, and Ethics Standards developments are some of the recent developments across Europe. In America, programs like Sarbanes Oxley (SOX), Dodd Franklin were important legislation aimed at curbing financial misappropriation and lack of transparency in publicly traded companies. In Ontario Canada, Bill 198 was implemented to protect investors against fraud. For the purpose of this project, emphasis will be laid on the convergence of the corporate governance. Can it be achieved, and under what circumstances can there be a global convergence of corporate governance. What are the constraints, and the possible solutions? The pace at which the globalization is connecting the world together on a common market place called cyberspace, the need to have a convergent corporate governance that will outlaw divergent, and or, the peculiarities of divergence over convergence. Can the two work together, yet able to address the concerns of differences in legal, cultural, ownership, actors and other structural differences. In the end, recommendations will be proposed on the best strategy to unite the global organizations around common corporate governance systems.

Performativity and convergence in comparative corporate governance

We engage with the convergence/divergence debate in the comparative study of corporate governance by commending a nuanced formulation of the convergence thesis. Directing attention to the precarious constitution and adoption of knowledge claims about corporate status and architecture in the field of corporate governance we suggest that the study of comparative corporate governance might usefully incorporate consideration of claims about corporate governance as potentially performative statements that function to stabilize particular ideas of status and architecture of the modern corporation with substantive outcomes for political economy, thereby influencing the shape of the institutions comprising the field of corporate governance. We conclude that the predominantly epistemological preoccupations of participants in the convergence/divergence debate could be usefully refined and supplemented by giving closer attention, empirical as well as theoretical, to the relation between performativity, convergence/divergence, and political economy.

Evolution of corporate governance in India and its impact on the growth of the financial market: an empirical analysis (1995-2014)

PurposeThe past few decades have seen a gradual convergence in corporate governance norms the world over, entailing a discernible shift towards shareholder primacy models. It holds particularly true of developing countries, many of which have steadily amended corporate governance norms to enhance the scope of shareholder rights. This is usually justified through the rationale that increasing protection for foreign investors and shareholders would mean greater investment in capital market and overall financial market development. In India, the shift coincides with a series of fundamental economic and financial policy reforms initiated in the 1990s: collectively and loosely referred to as “liberalisation”, this process marks a paradigm-shift from a tightly controlled welfare economy to one considerably more laissez-faire in its orientation. A fallout of which was that the need to attract and sustain foreign investments acquired an unprecedented significance. The purpose of this paper is to help the readers understand in this larger context the corporate law reform initiatives in India, particularly those pertaining to shareholder rights and allied issues.Design/methodology/approachThis paper empirically tests the hypothesis that enhanced shareholder protection leads to greater levels of investments, and financial developments generally. It then uses regression analysis to detect if the change in corporate governance, making it more shareholder-friendly, has had any effect on growth in financial market. It is divided into two broad parts. The first tracks the evolution of corporate governance norms in India. A robust qualitative and quantitative analysis is used to determine the tilt towards a shareholder primacy regime that Indian corporate governance regime now displays. The second chapter deals with the regression analysis where the outcome variable is financial market growth, and explanatory variable is the change in the governance regime with relevant control variables.FindingsThe authors find that change in shareholder primacy corporate governance has little effect on financial market growth in India. The authors would suggest that instead of changing the law in books, more emphasis should be given to implement those regulations and increase the overall rule of law.Originality/valueThis is the first time that such a wide-scale study has been conducted in India, using Bayesian methods. It ought to be of immense value to professionals and academics both.

Italian banking regulation and the legal obstacles to corporate governance convergence

An ongoing dispute in comparative corporate governance studies concerns the extent to which cross-country convergence towards, essentially, the shareholder primacy view is occurring. While some scholars, especially legal scholars and economists, have predicted (and sometimes advocated) a convergence of corporate governance practices towards the Anglo-American model of (seemingly) shareholder primacy, others sharply disagree and point to the persistence of stakeholder-oriented governance in many countries. Banking, from the point of view of corporate governance convergence, is an interesting industry, for at least two reasons: (i) banks are peculiar types of business organizations, entailing specific governance rules in most systems; (ii) banks are (monetary) financial intermediaries more and more active on capital markets, and thus more and more exposed to the isomorphic pressures generated on corporate governance by those markets. Thus, predictions on the convergence or divergence of banks’ corporate governance are not easy to make. The present paper aims to contribute to the scholarly dispute by analysing the Italian case, which has seen, over the past 30 years or so, an apparently unfettered process of transformation of banks’ governance and ownership towards the shareholder primacy model – a process epitomized by the recent reforms of the country’s cooperative banking sector. ‘Apparently’, because a closer look at the legal and regulatory bases of banks’ corporate governance actually shows many sources of divergence from the shareholder primacy model.Thus, the contribution proposed by the present study is twofold: first, it extends the ‘convergence’ discussion to the banking industry, where specific dynamics may help us better ‘test’ the hypotheses developed in the ‘convergence’ debate; second, it emphasizes alternative divergent patterns to those normally identified in the literature, where divergent ‘practice’ is often opposed to converging laws. Here, the sources of resistance to convergence are found in law itself.

Corporate Governance and the Financial Crisis: What Have We Missed?

The need for efficient corporate governance mechanisms, to restore the public’s trust in U.S. financial markets, increased after the latest round of corporate fraud cases that wiped out $8 trillion from the US market. Proponents of efficient governance argue that current mechanisms need revamping. This study explores the role of corporate governance in regulating the US market and sets forth corporate governance improvement recommendations. These recommendations address the need for proactive corporate governance, using meta analysis to reconcile conflicting research findings, employing alternative theoretical underpinnings that go beyond agency theory, thinking blockchains, and developing an agenda for corporate governance convergence.

Corporate governance and MNE strategies in emerging economies

We explore factors of convergence and divergence in corporate governance of emerging and developed market economies, focussing on the role of firm internationalisation. In particular, foreign investments by emerging economy firms led to upgrade of their governance capabilities. These firms also became advocates for home-country policy reforms that mandated the development of similar capabilities for local firms. We present a broad overview of the literature and propose an approach that considers the evolution of corporate governance, both at the national level and the firm level, with MNEs from both emerging market economies and developed economies as active actors in this process.

The Theoretical Foundations of Corporate Ownership Structure and the Ongoing Debate over Global Convergence of Corporate Law and Governance

The Theoretical Foundations of Corporate Ownership Structure and the Ongoing Debate over Global Convergence of Corporate Law and Governance

Corporate governance convergence in the European M&A market

Cross-border acquisitions lead to improvements in shareholder rights and more dispersed ownership structures in a large sample of intra-European takeovers. These findings are evidence of corporate governance convergence toward the Anglo-Saxon system through cross-border takeovers. However, we find no support for the corporate governance motive hypothesis in cross-border acquisitions even after accounting for potential sample selectivity. Although acquirers have significantly better shareholder rights than their targets, there are no robust marginal bidder wealth effects for firms that acquire either weaker or stronger governance foreign targets. Instead, bidder wealth effects in cross-border acquisitions are better explained by acculturation costs.