2 - The changing international corporate governance landscape

Summary

Even as interest in corporate governance has increased around the globe, there are still great debates about differences in governance models. Are practices converging or diverging? What is best practice? While some commentators asserted in the late 1990s that US productivity and employment demonstrated the superiority of shareholder-oriented systems of governance, corporate scandals a few years later have raised many new questions about what constitutes an “ideal” system. In this chapter, the authors examine the arguments and evidence about global differences and similarities in governance models. They find that, despite popular perceptions, there is little evidence of convergence, although rigorous studies are largely lacking and research in this area is inherently hard to design. To explore differences in governance in different parts of the world, the authors examine the changing role of the stock market in four countries: France and Germany in the developed world, and the emerging economies of South Korea and Argentina.

Corporate governance has been widely discussed and debated over the last two decades in the United States and Britain. While governance initially attracted much less attention in Europe, Asia, and other parts of the world, by the late 1990s, it had become a major, and highly contentious, issue in all of the advanced economies and in emerging economies and developing countries. However, while discussions have raged about governance within individual countries and regions, there has also been a broader question: are governance practices converging toward or diverging away from a common norm?