Shareholder primacy corporate governance and financial market growth

• Date: 07 October 2019
• DOI: https://doi.org/10.1108/CG-10-2019-385
• Published date: 07 October 2019
• Pages: 845-848
• Author: Navajyoti Samanta,Andrew Johnston
• Subject Matter: Strategy,Corporate governance

Guest editorial

Navajyoti Samanta and Andrew Johnston

Shareholder primacy corporate governance and financial market growth

Introduction

The OECD Principles of Corporate Governance (OECD Principles) are viewed by global

financial organisations such as the IMF and the World Bankas the essential reference point

for company law reforms in individual countries. The OECD and the global financial

organisations claim that countries transposing the OECD Principles into domestic law and

regulation will experiencehigher financial market growth. Whilst there are competingmodels

of corporate governance around the world, the one promoted by the OECD Principles

borrows heavily from Anglo-American corporate governance model, which focuses on

shareholder primacy,and places emphasis on securing the rights of foreign investors. Critics

have claimed that Anglo-Americancorporate governance encourages short-termism(that is,

companies and their management prioritise short-term financial gains over long-term

sustainable growth) and financial engineering (executives focus on increasing share prices

through financial manoeuvres rather than increases in productivity). Whilst institutional

investors exert pressure for shareholder value everywhere, the pressure to conform to the

OECD Principles and convergeon the practices of Anglo-American corporate governanceis

highest in developing countries. This special issue of Corporate Governance: The

International Journal of Business in Society aims to find out whether those developing

countries that have adoptedthe OECD Principles have, as a result, actually experienced the

“promised” growth in their financial markets. The special issue also traces the development

of corporate governance normsin other countries, identifying the factors which drive change

and analysing theirimpact on firm level financial outcomes.

A total of 28 papers were submitted for inclusion in the special issue and, after a year

involving multiple rounds of revisions and reviews, 12 papers were selected for publication

(the accepted papers are set out in Table I). The papers can be divided into four broad

themes: macro empirical analysis of legislation in sphere of corporate governance in one or

more countries; panel data analysis of changesin corporate governance policies of a single

country; empirical analysis of the linkage between corporate governance practices and

investment flows in a single country; and empirical analysis of the impact of corporate

governance modelson the development or dynamics of financialmarkets.

The research published in this special issue contributes to our understanding of the actual

contribution of corporate governance in generating financial market growth. It highlights the

macroeconomic risks and potential of making far-reaching legal changes by transplanting

foreign norms. As such, we hope that it will inspire the OECD and international financial

organisations to take a more nuanced approach to corporate governance, drawing on the

various extant corporate governance traditions, rather than simply adopting shareholder

primacy corporategovernance as a blueprint for the wholeworld.

The first article of the special issue “Convergence to shareholder primacy corporate-

governance: Evidences from a leximetric analysis of evolution of corporate-governance

regulations in 21 countries, 1995-2014” provides the foundation for this issue by analysing

panel data on the evolutionof corporate governance across 19 developing and 2 developed

countries. The data have been collected from subject experts from each of the countries

Navajyoti Samanta and

Andrew Johnston are both

based at School of Law,

University of Sheffield,

Sheffield, UK.

We would like to thank the

Editor in Chief, Associate

Professor Gabriel Eweje for his

encouragement and

suggestions, Sameer Kalkeri

content editor in Emerald

Publishing for his tireless

assistance and all the reviewers

without whom this special issue

would not have been possible.

DOI 10.1108/CG-10-2019-385 VOL. 19 NO. 5 2019, pp. 845-848, ©Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 845