The Relation Between Firm-Level Corporate Governance and Market Value: A Study of India

There is some interesting new data in this article.


Bala N. Balasubramanian
Indian Institute of Management Bangalore

Bernard S. Black
Northwestern University - School of Law; Northwestern University - Kellogg School of Management; University of Texas at Austin - School of Law; McCombs School of Business, University of Texas at Austin; European Corporate Governance Institute (ECGI)

Vikramaditya S. Khanna
University of Michigan Law School

The Relation Between Firm-Level Corporate Governance and Market Value: A Study of India

ABSTRACT: Relatively little is known about the corporate governance practice of firms in emerging markets. We provide a detailed overview of the practices of publicly traded firms in India, and identify areas where governance practices are relatively strong or weak, relative to developed countries. We also examine whether there is a cross-sectional relationship between measures of governance and measures of firm performance and find evidence of a positive relationship for an overall governance index and for an index covering shareholder rights. The association is stronger for more profitable firms and firms with stronger growth opportunities.

Corporate Governance at the World Bank and the Dilemma of Global Governance

There is a very interesting forthcoming piece in the World Bank Economic Review titled Corporate Governance at the World Bank and the Dilemma of Global Governance by Ashwin Kaja and Eric Werker.

ABSTRACT: Most major decisions at the World Bank are made by its Board of Executive Directors. While some countries enjoy the opportunity to serve on this powerful body, most countries rarely, if ever, get that chance. This gives rise to the question: Does board membership lead to higher funding from the World Bank's two main development financing institutions, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Empirical analysis shows that developing countries serving on the board can expect more than double the funding from the IBRD as countries not on the board. In absolute terms, countries on the board receive an average $60 million "bonus" in IBRD loans, an amount that rises in years when IBRD loans are in high demand, particularly for countries in the most influential seats. This effect is more likely driven by informal rules and norms in the boardroom than by the power of the vote itself. No significant effect is found in IDA funding. These results point to challenges of global governance through representative institutions.

Democratization and Economic Globalization

A new article caught my attention. Helen V. Milner, Princeton University and Bumba Mukherjee, Pennsylvania State University have work that came out in the Annual Review of Political Science, (Vol. 12, pp. 163-181, 2009) titled Democratization and Economic Globalization.

ABSTRACT: We address two questions that are central to the literature on the emergence of democracy and economic globalization. First, does democratization foster higher levels of trade and capital account openness? Second, do trade and capital account openness increase the likelihood of democratization? We review the literature in international political economy and comparative politics that has theoretically and empirically addressed these questions. We then conduct some empirical tests in a sample of developing countries to briefly evaluate the empirical relationship between democracy and economic globalization. Our analysis reveals that evidence for the claim that democracy fosters trade and capital account liberalization is robust but that empirical support for the predicted positive effect of economic openness on democracy among developing countries is weak. More theoretical work is needed to clarify the link between democracy and economic liberalization, and to this end we provide possible topics for future research.

Attention Lower and Middle Income Country Academics

Christine Parker (University of Melbounre - Law) has asked for some help. She writes:

Vibeke Nielsen and myself together chair the “collaborative research network on regulatory governance” for the US Law and Society Meeting. We have the opportunity to obtain some funding to help bring scholars from low and middle income countries to the next two meetings of the Law and Society Association in San Francisco (2011) and Hawai’i (2012). However we need to have the names of scholars now.

If you are in this category, would you please email me urgently (by Monday June 7) with your name and a very rough idea of the topics on which you might present at the Law and Society meeting. (You will not be held to it – but we do need to provide a specific indication at this stage.

I have included a list of relevant countries below my signature line.

All the best,

Christine Parker

Dr Christine Parker
Associate Professor and Reader
ARC Australian Research Fellow
Melbourne Law School
University of Melbourne
Victoria 3010 AUSTRALIA
(+61) (0)3 8344 1093
My web profile:
http://www.law.unimelb.edu.au/staff/Christine%20Parker


Below is a list of low income, lower middle income and upper middle income countries.

LOWER
Afghanistan
Bangladesh
Benin
Burkina Faso
Burundi
Cambodia
Central African Republic
Chad
Comoros
Congo, Dem. Rep.
Eritrea
Ethiopia
Gambia, The
Ghana
Guinea
Guinea-Bissau
Haiti
Kenya
Korea, Dem. Rep.
Kyrgyz Republic
Lao PDR
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Senegal
Sierra Leone
Somalia
Tajikistan
Tanzania
Togo
Uganda
Uzbekistan
Vietnam
Yemen, Rep.
Zambia
Zimbabwe
****
LOWER MIDDLE
Albania
Angola
Armenia
Azerbaijan
Belize
Bhutan
Bolivia
Cameroon
Cape Verde
China
Congo, Rep.
Côte d'Ivoire
Djibouti
Ecuador
Egypt, Arab Rep.
El Salvador
Georgia
Guatemala
Guyana
Honduras
India
Indonesia
Iran, Islamic Rep.
Iraq
Jordan
Kiribati
Kosovo
Lesotho
Maldives
Marshall Islands
Micronesia, Fed. Sts.
Moldova
Mongolia
Morocco
Nicaragua
Nigeria
Pakistan
Papua New Guinea
Paraguay
Philippines
Samoa
São Tomé and Principe
Solomon Islands
Sri Lanka
Sudan
Swaziland
Syrian Arab Republic
Thailand
Timor-Leste
Tonga
Tunisia
Turkmenistan
Ukraine
Vanuatu
West Bank and Gaza
*****
UPPER MIDDLE
Algeria
American Samoa
Argentina
Belarus
Bosnia and Herzegovina
Botswana
Brazil
Bulgaria
Chile
Colombia
Costa Rica
Cuba
Dominica
Dominican Republic
Fiji
Gabon
Grenada
Jamaica
Kazakhstan
Latvia
Lebanon
Libya
Lithuania
Macedonia, FYR
Malaysia
Mauritius
Mayotte
Mexico
Montenegro
Namibia
Palau
Panama
Peru
Poland
Romania
Russian Federation
Serbia
Seychelles
South Africa
St. Kitts and Nevis
St. Lucia
St. Vincent and the Grenadines
Suriname
Turkey
Uruguay
Venezuela, RB