On the convergence of corporate governance practices in emerging markets

Purpose – A high quality of corporate governance practices is important for a sustainable development of an economy. The purpose of this paper is to analyze the convergence and adaption of corporate governance practices in emerging markets. It shows how Brazil, Russia, India, and China (BRIC) firms apply international standards of good corporate governance and which factors affect the quality of corporate governance practices in BRIC countries. Design/methodology/approach – The authors use country and firm-level data from the BRIC countries and apply statistical models to identify the convergence of corporate governance practices. In all, 135 largest firms from Brazil, Russia, China, and India are analyzed. Findings – The study shows that firms from BRIC countries adapt to international best practices in corporate governance beyond the official requirements by national corporate governance codes. International institutions positively influence BRIC firms to apply international standards of good corporate governance. National corporate governance regimes (Anglo-American, Continental-European, and mixed systems) follow path dependencies and lead to differences in corporate governance practices among firms in different regimes. Research limitations/implications – Only a small number of 13 corporate governance best practices and a small number of countries have been selected and coded for this analysis. The presented results have to be interpreted with some caution. Originality/value – The study concludes with practical and specific insights for investors, managers, and policy makers on the importance of national government regimes and international institutions on corporate governance practices. Investors in BRIC need to better understand the contrasting governance environments in emerging markets, and their effects on corporate governance practices in each country. The findings suggest that corporate governance should be studied by considering multilevel antecedents on a country-, industry-, and firm-level.