Corporate Governance, Investor Protection and Performance in Emerging Markets

By L. Klapper, Inessa Love. 2004

1,189 citations recorded by the source corpus.

Recent research studying the link between law, and finance has concentrated on country-level investor protection measures, and focused on differences in legal systems across countries, and legal families. The authors extend this literature, and provide a study of firm-level corporate governance practices across emerging markets, and a greater understanding of the environments under which corporate governance matters more. Their empirical tests show that better corporate governance is highly correlated with better operating performance, and market valuation. More important, the authors provide evidence showing that firm-level corporate governance provisions, matter more in countries with weak legal environments. These results suggest that firms can partially compensate for ineffective laws, and enforcement by establishing good governance, and providing credible investor protection. The authors' tests also show that firm-level governance, and performance is lower in countries with weak legal environments, suggesting that improving the legal system, should remain a priority for policymakers.

Subfields: Accounting, Information Systems

View Paper: https://www.semanticscholar.org/paper/8c573d79dc51371841ab2e6d0cd94094e67f92ba

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Citations in the corpus

Political Connections and Minority-Shareholder Protection: Evidence from Securities-Market Regulation in China (2010, neutral): “This finding is consistent with the argument in Klapper and Love (2004) that shareholders of firms with weak governance are more reliant upon legal and regulatory protection from expropriation by”
Corporate Governance and Regulation: Can There Be Too Much of a Good Thing? (2007, neutral): “Using data on company corporate governance practices across countries, Durnev and Kim (2005) and Klapper and Love (2004) show the impact of corporate governance to be a decreasing function of legal protection. Doidge, Karolyi and Stulz (forthcoming) show that country effects dominate company corpora”
Why Do Countries Matter so Much for Corporate Governance (2007, methodology): “…Standard & Poor’s (S&P), and Institutional Shareholder Services (ISS), several studies have investigated how governance and disclosure are related to firm characteristics (Krishnamurti, Sevic, and Sevic, 2003; Klapper and Love, 2004; Durnev and Kim, 2005; Francis, Khurana, and Pereira, 2005).”
The Impact of board characteristics on Firm Performance: Evidence from Nonfinancial Listed Companies in Kuwaiti Stock Exchange (2012, neutral): “…& Butler, 1985; Rechner & Dalton, 1991; Coles & Jarrell, 2001; Rhoades et al, 2001; Khatri et al., 2002; Judge et al., 2003; Brown & Caylor, 2004; Klapper & Love, 2004; Chen et al, 2005; Haniff & Hudaib, 2006 and Kajol & Sunday, 2008) which examined the relationship between corporate governance…”
Corporate Governance and Value in Brazil (and in Chile) (2005, methodology): “Klapper and Love (2004) dealt with the problem with control variables such as size, past growth, capital intensity, an ADR dummy, legal system effectiveness measures, and an interaction term between the legal system and the existence of ADRs.”
Auditors' Governance Functions and Legal Environments: An International Investigation (2007, neutral): “this conjecture, a number of recent accounting and finance studies find that firm-level governance substitutes are used in weak legal environment (La Porta et al., 1997; Gomes, 2000; Dyck and Zingales, 2002; Klapper and Love, 2004; and Lang et al., 2003, 2004).”