Beware of Global Governance Conformance

The quest for a single set of global governance standards is misguided and investors should stop using global governance standards based on US policy approaches. That’s the conclusion of Lucian Bebchuk and Assaf Hamdani in their latest paper: “The Elusive Quest for Global Governance Standards”.

The key issue at the heart of what many will see as a provocotive piece of research into Corporate Governance Indices is that they don’t take account of  a company’s ownership structure.

In conclusion, the paper suggests that to improve corporate governance and investor protection, public officials and investors in countries whose capital markets are dominated by controlled companies “should be wary of global governance standards developed for US companies.”

Instead they should focus on the special problems of controlled companies and on the rules that would work best for protecting smaller investors in such companies.

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