Corporate Governance in Emerging Markets: Theories, Practices and Cases PDF
Preview Corporate Governance in Emerging Markets: Theories, Practices and Cases
CSR, Sustainability, Ethics & Governance Series Editors: Samuel O. Idowu · René Schmidpeter Sabri Boubaker Duc Khuong Nguyen Editors Corporate Governance in Emerging Markets Theories, Practices and Cases CSR, Sustainability, Ethics & Governance Series Editors Samuel O. Idowu, London Metropolitan University, Calcutta House, London, United Kingdom Rene´ Schmidpeter, Ingolstadt, Germany For furthervolumes: http://www.springer.com/series/11565 ThiSisaFMBlankPage Sabri Boubaker (cid:129) Duc Khuong Nguyen Editors Corporate Governance in Emerging Markets Theories, Practices and Cases Editors SabriBoubaker DucKhuongNguyen DepartmentofAccountingandFinance IPAGResearchLab ChampagneSchoolofManagement IPAGBusinessSchool (GroupeESCTroyesenChampagne) Paris Troyes France France ISSN2196-7075 ISSN2196-7083(electronic) ISBN978-3-642-44954-3 ISBN978-3-642-44955-0(eBook) DOI10.1007/978-3-642-44955-0 SpringerHeidelbergNewYorkDordrechtLondon LibraryofCongressControlNumber:2014934665 ©Springer-VerlagBerlinHeidelberg2014 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionor informationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped.Exemptedfromthislegalreservationarebriefexcerpts inconnectionwithreviewsorscholarlyanalysisormaterialsuppliedspecificallyforthepurposeofbeing enteredandexecutedonacomputersystem,forexclusiveusebythepurchaserofthework.Duplication ofthispublicationorpartsthereofispermittedonlyundertheprovisionsoftheCopyrightLawofthe Publisher’s location, in its current version, and permission for use must always be obtained from Springer.PermissionsforusemaybeobtainedthroughRightsLinkattheCopyrightClearanceCenter. ViolationsareliabletoprosecutionundertherespectiveCopyrightLaw. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. While the advice and information in this book are believed to be true and accurate at the date of publication,neithertheauthorsnortheeditorsnorthepublishercanacceptanylegalresponsibilityfor anyerrorsoromissionsthatmaybemade.Thepublishermakesnowarranty,expressorimplied,with respecttothematerialcontainedherein. Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Foreword Corporategovernancehaslongbeenrecognizedasanimportantareaofscholarship in many fields that include economics, finance, law, and management. Corporate governance practices vary from one country to another due to differing legal and institutional settings, economic conditions, and cultural disparities around the world. As such, there is a significant need for corporate governance scholars to understandtheinstitutionalcontext.Thosethatareinterestedinemergingmarkets naturallyneedspecializedknowledgeofsuchmarkets.Saiddifferently,solutionsto corporate governance problems are not merely adoptable from one country to the next,giventhedifferencesinlegal,institutional,economic,andculturalconditions. China represents a classic case in point. China has had the fastest growing economy for many years in a row, yet corporate governance is vastly different in Chinathaninwesterncontexts.Corporategovernancelegalrulesarenotadoptedin China in a way that corresponds to western style legal settings. Rather, informal institutionsappeartobeextremelyimportantinthecontextofChina,asexplained inthewidelyreferencedstudyofAllenetal.(2005).Similarevidenceisfoundin India(Allenetal.2006). Given the importance of context in corporate governance scholarship, it is extremely useful to have a book dedicated to corporate governance in emerging markets.ThisvolumeeditedbyleadingscholarsSabriBoubakerandDucKhuong Nguyen is an excellent source on topic. This book comprises 25 chapters on corporate governance in emerging markets. There are a total of 59 coauthors representing 22 countries (Australia, Bangladesh, Brazil, China, Estonia, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Morocco, the Philippines, Poland, Russia, Spain, Switzerland, Thailand, the United Kingdom, Ukraine, and theUnitedStates).Theauthorsareamongthetopscholarsinthefieldofcorporate governanceandhavespecializedexpertiseinemergingmarkets.Overall,thisbook represents a significant contribution to the literature on corporate governance in emerging markets, and as such, it is an invaluable reference for academics, prac- titioners,andpolicymakersalike. v vi Foreword Therearefivepartstothisbook.PartIaddressesissuespertainingtoCorporate Governance and Firm Performance, which represents the first four chapters. Data are presented from India (Chaps. 1, 3, and 4), China (Chaps. 2 and 4), and Hong Kong, Indonesia, the Philippines, and Thailand (Chap. 2). The authors present analyses of shareholder rights (Chaps. 1 and 2), product market competition (Chap. 3), and boards (Chap. 4). The authors show how firm value is affected by governanceinthesespecificcontexts. PartII(Chaps.5,6,7,8and9)coverstopicsonCorporateGovernanceandFirm Behavior.DataarepresentedfromBangladesh(Chap.5),China(Chap.6),Russia (Chap. 7), and multi-country samples (Chaps. 8 and 9). Topics covered include familyfirmsandboardstructure(Chap.5),earningsmanagement(Chap.6),orga- nizationalbehavior(Chap.7),accountingconservatism(Chap.8),andprivatization (Chap.9).Theauthorsexplainhowcorporategovernancehasapronouncedimpact ineachofthesespecificcontexts. PartIII(Chaps.10,11,12,13,14,15and16)examinesCorporateGovernance Practices in Emerging Markets. Data are presented from the Ukraine (Chap. 10), Estonia(Chap.11),Poland(Chap.12),EasternEurope(Chap.13),thePhilippines andSwitzerland(Chap.14),Nigeria(Chap.15),andBangladesh(Chap.16).Topics coveredincludetheevolutionofcorporategovernancestandards(Chaps.10,11,14, 15,and16),auditcommitteesandsupervisoryboards(Chap.12),andmultinational companies (Chap. 13). The authors provide useful analyses of differences in governancepracticesandstandardsacrosscountriesandovertime. Part IV (Chaps. 17, 18, 19, 20, and 21) studies practical issues surrounding corporate governance laws and reforms. Data are presented from Bangladesh (Chap. 18), Brazil (Chaps. 19 and 20), and a multitude of countries (Chaps. 17 and21).Topicscoveredincludecorruption(Chap.17),regulatoryandlegalreforms (Chap. 18 and 19), pension funds (Chap. 20), and banks (Chap. 21). The authors showthatlegalreformsarenoteasilytransferrableacrosscountriesandgovernance providedbypensionfundsandbanksislikewisenotimplementedinthesameway anddoesnothavethesameeffectsacrosscountries. Part V (Chaps. 22, 23, 24 and 25) provides lessons from practitioners that corporate governance matters. The authors discuss data and cases from the MENA region (Chap. 22), Morocco (Chap. 24), and a multitude of countries (Chaps. 23 and 25). The authors review topics that include shareholder activism and investment behavior (Chap. 22), microfinance institutions (Chap. 23), non-listed companies (Chap. 24), and the international corporate governance best practices (Chap. 25). Among other things, the authors provide many practical insightsassociatedwithimplementingcorporategovernanceinthesecontexts. In sum, this book is very well organized and provides in-depth analyses of corporategovernanceinmanyinterestinganduniquecontextsinemergingmarkets. Itwillserveasanexcellentresourceforscholarsforyearstocome. Toronto,Canada DouglasCumming 26September2013 SchulichSchoolofBusiness YorkUniversity Foreword vii References Allen,F.,Qian,J.,&Qian,M.,(2005).Law,finance,andeconomicgrowthinChina.Journalof FinancialEconomics,77(1),57–116. Allen,F.,Chakrabarti,R.,De,S.,Qian,J.,&Qian,M.(2006).FinancingfirmsinIndia.Journalof FinancialIntermediation,21(3),409–445. . Preface Emerging markets are commonly known as financial markets of rapid growth economies that have, over the recent decades, undertaken a wide range of social, political, and economic reforms to put their economies on a more sustainable footing. In general, the expression of emerging markets also refers to emerging economies.Withincreasingintegrationoftradeandfinanceflowsinthecontextof globalization, emerging markets now play an important role for global economy growth and portfolio diversification. Altogether, they reached about 54 % of the world GDP measured at purchasing power parity, and they accounted for three- quarters of global real GDP growth over the past decade (The Economist, print editioninAugust2011).Whiledevelopedcountriesexperiencedsevereeconomic slowdown in the aftermath of the US subprime crisis, economic growth across emerging countries is still projected to grow at a steady rate through the next decade.Thus,thedifferencesingrowthpotentialbetweenemerginganddeveloped countriesleadnecessarilytochangesinthewayinvestorsworldwideallocatetheir availablefundsandvaluetheirinvestmentsinemergingcountries. Despite their high potential of growth, emerging markets investments are not withoutrisk. Theyare commonly known as risky investments due toa number of market imperfections including particularly the lack of transparency, sound regu- lations,stringentaccountingandreportingstandards,andminorityinvestorprotec- tion.Then,allpotentialinvestorsshouldenterthesemarketswithaclear-eyedview ofcorporategovernancelaws,rules,andpractices.Inparticular,theyshouldbeable to grasp the underlying realities of the business environment and to adapt global corporate governance standards to local market specificities. In the meantime, research on corporate governance in emerging markets remains scanty and sparse andrequiresadditionalstudiesatbothcountryandfirmlevels. This edited volume is intended to provide the readers with an in-depth under- standingofgovernancemechanisms,practices,andcasesinemergingmarkets.This book is an invaluable resource not only for academic researchers and graduate studentsinlaw,economics,management,andfinancebutalsoforpeoplepracticing governance such as lawmakers, policymakers, and international organizations promoting best governance practices in emerging countries. Investors benefit ix
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