Speaker:
Bernard Black
Northwestern University School of Law and Kellogg School of
Management
Discussant:
Johan Sulaeman
National University of Singapore
Abstract
Paper authors: Bernard Black, Antonio Gledson De Carvalho, Vikramaditya Khanna, Woochan Kim and Burcin Yurtoglu
Well-constructed, country-specific “corporate governance indices” can predict higher firm values in emerging markets. However, there is little credible research on which aspects of governance drive that overall relationship. We study that question across four major emerging markets (Brazil, India, Korea, and Turkey). We build overall country-specific gov ernance indices, comprised of indices for disclosure, board structure, ownership structure, shareholder rights, board procedure, and control of related party transactions. Disclosure (especially financial disclosure) predicts higher market value across all four countries. Board structure (principally board independence) has a positive coefficient in all countries and is significant in two countries. The other indices do not predict firm value. These results suggest that regulators and investors, in assessing governance, and firm managers, in responding to investor pressure for better governance, would do well to focus on disclosure and board structure.
