Enforcement and Good Corporate Governance in Developing Countries and Transition Economies

By Erik Berglöf, Stijn Claessens. 2006

166 citations recorded by the source corpus.

More than regulations, laws on the books, or voluntary codes, enforcement is a key to creating an effective business environment and good corporate governance, at least in developing countries and transition economies. A framework is presented to help explain enforcement, the impact on corporate governance when rules are not enforced, and what can be done to improve corporate governance in weak enforcement environments. The limited empirical evidence suggests that private enforcement tools are often more effective than public tools. However, some public enforcement is necessary, and private enforcement mechanisms often require public laws to function. Private initiatives are often also taken under the threat of legislation or regulation, although in some countries bottom-up, private-led initiatives preceded and even shaped public laws. Concentrated ownership aligns incentives and encourages monitoring, but it weakens other corporate governance mechanisms and can impose significant costs. Various steps can be taken to reduce these costs and reinforce other corporate governance mechanisms. But political economy constraints, resulting from the intermingling of business and politics, often prevent improvements in the enforcement environment and the adoption and implementation of public laws.

Subfields: Accounting, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/8960f67616440a4197c59e2cce7db94f3e8e88a2

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In Accounting

1. H. Hu
2. M. Tan
3. G. Munisi
4. Trond Randøy
5. O. Tam

In Sociology and Political Science

1. G. Munisi
2. Trond Randøy
3. O. Tam

Citations in the corpus

• When No Law is Better Than a Good Law (2009, unknown): “…Tokyo, 186-8603 JAPAN Tel: +81-42-580-8405 Fax: +81-42-580-8333 e-mail: cei-info@ier.hit-u.ac.jp *We thank Kazuhiko Ohashi and participants in the seminars at the Bank of Japan, Hitotsubashi University, Indiana University, MIT, University of Tokyo and Yokohama University for improving the paper.”
• Corporate Boards, Ownership Structure and Firm Performance in an Environment of Severe Political and Economic Crisis (2012, unknown): “In such an environment, the managerial agency costs are expected to increase---managers are provided with the ability and incentive to expropriate wealth (e.g., La Porta et al., 2002; Klapper and Love, 2004; Berglof and Claessens, 2006).”
• Corporate Governance Quality: Trends and Real Effects (2006, unknown): “First, tracking changes in corporate governance with de jure measures is difficult, since improvements may not necessarily occur because of lags in implementation and/or enforcement, as stressed by Berglöf and Claessens (2006), who more generally point out that it is hard to measure enforcement of c”
• Corporate governance and company performance across Sub-Saharan African countries (2013, background): “The enforcement of laws and regulations is regarded as a central issue of good corporate governance practice (Berglöf and Claessens, 2006, La Porta et al., 2000).”
• Internal governance mechanisms and firm performance in China (2009, background): “These findings therefore reinforce Berglöf and Claessens’ (2006) study on corporate governance enforcement, which suggests that highly concentrated ownership structure has indeed weakened the governance role of other IGMs, particularly in countries such as China with poorly functioning external gove”