CONVERGENCE OR DIVERGENCE IN CODES OF CORPORATE GOVERNANCE: A CROSS BORDER ANALYSIS

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This article was written by Priyanshi Singh, LLM student of National Law University, Jodhpur.

CHAPTER 1: An Introduction

Corporate Governance has been defined as “Procedures and processes according to which an organisation is directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation – such as the board, managers, shareholders and other stakeholders – and lays down the rules and procedures for decision-making” by OECD.[1]

The basic underlying principle behind Corporate Governance is to strike a balance between public and individual objectives and social and economic objectives. The purpose of the corporate governance framework is to promote the competent utilisation of resources and to also entail accountability for their stewardship. The primary motive to be achieved is to ensure proper alignment of interests of corporations, society and individuals. [2]

The definitions of Corporate Governance help us draw an inference that this concept targets to secure a proper balance between the interests of several parties such as corporations, shareholders, stakeholders, consumers, investors, management etc. This framework provides essential rules and regulations and establishes a system which provide for the direction and control of a corporation. The idea is to successfully accomplish a corporation’s targets by ensuring that a balance is maintained between the interests of all the parties involved.

The framework and mechanism of corporate governance vary from countries to countries and organization to organization. The mechanisms of governance in each corporation are laid out in view of its objectives and political, social, legal and economic situation prevailing in the country. Any company adopting a corporate governance framework sets to reflect via it the outlook of the top level management and values and beliefs inculcated in the company.

In recent times, corporate governance has emerged as a grave subject matter for corporations, business practitioners, policy makers, media etc. There are several reasons behind this. Primarily, globalisation as a concept has enabled in opening gateways for international investors to the capital markets across the world economy. A well-defined and structured corporate governance framework is essential to ensure that the interest of these investors are protected and their rights are not violated in a manner that they are able to earn benefits as well. Also, infamous corporate scams that have taken place all over the world have deteriorated the trust of the public in organisations. Consequently, there has been a surge in demands for a well-defined and structured corporate governance framework.

Corporate governance framework and codes, for most corporations did not materialise and surface through an ordinary course of business. Due to the necessity to comply with legal requirements in a country and to match standards set by the industry and sectors, its implementation became mandatory. It’s due to such an adoption that various corporations have come around to establish corporate governance framework in their own manner.

It is pertinent to note that in today’s date corporations are not confined to one nation itself. They have intersected all borders and are now present in several nations. This leads to the development of an essential question: Whether it is probable to have corporate governance standards which can be accepted and implemented at a universal level? And whether it is possible that at a global level, corporate governance principles are developed and accepted?

It was first in the era of mid 90’s that discussions on the subject matter of convergence of codes began and it was pointed out in various researches that the corporate governance codes are moving towards the adoption of the Anglo-American Model. Upon research, it has been so far established that the Anglo-American model has peculiar characteristics such as:

Shareholder value norms
One tier boards
Low ownership concentration

On the other hand, the corporate governance models have the following peculiar characteristics:

Stakeholder concerns
Two tier boards
Focus on insider ownership

It is pertinent to draw attention towards the fact that there have been intense deliberations on the subject that if confluence in codes of corporate governance globally has consequentially led to the result that different corporate governance systems have converged towards one specific system or if it has indeed led to the securement of different codes due to the peculiar differences in the codes of corporate governance. What is essential is that this popular debate on divergence and convergence is severely complicated and interfaces at various levels complicate it even further.

There have been discussions on the subject that if corporate governance mechanisms and frameworks are converging into the Anglo-Saxon model (Aguilera and Jackson, 2003; Morgan, Whitley, and Moen, 2005; Yoshikawa, Tsui-Auch, and McGuire, 2007). It was laid out by both Cuervo (2002) and Reid (2003) that in spite of the existence of a starking level of difference in codes across nations there has been an increase in confluence of codes and they laid out the flowing reasons for the same:

Globalization
Liberalisation of market
Advent of significant foreign investors
Endorsements by international organisations on ideal practices

While on one hand there are proofs that codes of corporate governance are converging yet at the same time it’s evident that every code retains and continues to possess salient characteristics which are peculiar to the country (Hermes et al. 2007). Academicians and scholars claim that have point out that it is not possible to have one particular model that suits all.

Hence, diffusions in codes of corporate governance is bound to happen as there is supposed to be diversity in codes depending upon the nation in which the corporation is functioning (Balgobin, 2008).

The deliberations on the issue of divergence vs convergence are not one to be carried on with much ease and for this reason it’s important to go beyond this gulf and to pay importance to the undercurrents of application of codes of good governance.

CHAPTER 2: Convergence of Corporate Governance

Origin of Corporate governance

The expression “corporate governance” is said to come into view and began to be exercised in midlate 1970s in U.S. and now it is a subject divergent from corporate management and corporate organization.[3] Debate of corporate governance as a public policy matter in U.S. began with a model and classic work, “The Modern Corporation and Private Property, written by Adolf Berle Jr., a law professor, and Gardiner Means, an economist in 1932,[4] and described as “‘the most important study ever written about the ownership and governance of the American business corporation’ (Mark 1995: 973).[5]”

Berle and Means has described that the rise of professional managers having little or zero ownership of company, though have control and authority to manage large corporatins, and scrutinize the growing absorption of ecnoomic supremacy in modern corporation. They consigned to the dispersion of corporate shares within the people also, who though own shares of corporation but still cannot not employ authority or be in command of the corporation, reason being that they were“”numerous, widely scattered,””and also had “comparatively small or little interests.” This is what is known as “’separation of ownership and control’”in the contemporary corporations of America. Thus term corporate governance was recognized by“Berle and Means”as a“”classical agency problem: how could corporate managers as agents of the shareholders, be induced to manage corporate assets in the best interests of their principals?””

Therefore the fundamental concern of all the scholars,investors as well as the practitioners of corporate governance of U.S. is which mode is to be used to guard and defend the rights as well as the interests of the shareholders“in relation to managers who control the corporation.The problem of corporate governance is still in debate in the U.S. and in the world, and it is said that since the collapse of Enron and other financial scandals in the U.S., public concern with the question of how to make a system that will induce corporate executives to manage corporate assets in the interest of the shareholders, instead of their own interest was “re-ignited.””

2. Internationalization of Corporate Governance

It is so believed that the debate of corporate governance became internationalized as and from the time the investment and the international trade boomed and increased in the global economy.

As per the comments of“Hwa-Jin Kim”,the inducement elements and the spur elements to the internalization of corporate governance can be described as below:

Since 1980s U.S. scholars started researching on the enyerprises present in German and also Japan and paid attention as how their concentrated ownership system was different from the system prevalent in the U.S. turned their attention to German and Japanese enterprises, which have concentrated ownership systems that are different from those of the U.S. U.S. scholars had began to conduct a research on those enterprises with an object to find out a possibility to solve agency problem prevalent in U.S. enterprises. The developing countries were gradually adopting the capitalistic economy because of which the concern of U.S. enterprises and scholars further increased. Because of the fact that thses countries recently adopted the capitalistic mode of economy all of them needed a specidic and standatd model in order to develop their capital market as well as the corporate governacne, the U.S. scholares and U.S. enterprises were interested as they wanted corporate governance in these developing countries enterprises and were keen in investing in the enterprises in those countries in a large scale respectively. At the sime time“as initial public offerings (IPOs) of foreign enterprises in the U.S. increased, institutional investors, the Securities and Exchange Commission (SEC), and the U.S. Stock exchanges were interested in the corporate governance of foreign enterprises.[6]”

The escalation and expansion of the multinational corporations as well as the raise in cross border merger and acquisitions in U.S. enterprises have implicated, invited and incurred regularly disparity and inconsistency between U.S. and foreign system. Therefore the U.S. enterprises and also the investment banks were all interested in foreign and global corporate governance and legal constitution of capital market. As a consequence , corporate governance present in a particular country is not anymore a mere domestic issue, it is a subject to the interest arena of international economy, because of the fact that it can be the foundation and basis of an“international financial crisis in mutual relation of global economy as we are experiencing now.”

3.The Convergence Debate in Corporate Governance

An immense and enormous academic research and research work has come forward, specifically at the cross border and inter relation of law and financial aspects, with respect to whether globalization and expanding monetary joining have prompted merging of corporate administration benchmarks crosswise over nations. Various researchers have examined the contrasts between corporate administration structures of common law and customary law frameworks around the globe. These researchers contend that distinctive corporate administration administrations have been going after strength. Thusly, a significant part of the corporate administration merging level headed discussion has rotated around which of the two distinct models of corporate structures, the shareholder-situated/scattered proprietorship display or the partner arranged/concentrated possession demonstrate, has triumphed or will triumph. Most merging hypothesis researchers propel the supremacy of the AngloAmerican model of administration, contending that this model is the “endpoint of a transformative improvement” and is “both attractive and unavoidable., They battle that a worldwide accord of shareholder power is developing.These researchers assist propose that meeting to the Anglo-American model will profit nations and organizations. They attest that, given globalization and the expanded relationship of money related markets the world over, some level of consistency and union would advance the worldwide competitiveness of firms.

But there are a numerous opponents and rivals of convergence theory. Opponents notably Professors Roe and Bebchuk, contend that such convergence is though desirable but certainly not possible as “path dependency” leads the way to significant obstacles and hindrances to convergence. Professor Coffee formulated path dependence theory contends that

“history matters, because it constrains the way in which institutions can change, and efficiency does not necessarily triumph.”

These contentions are hence predictable with theories of paeth dependency that they perceive the effect of local financial conditions, governmental issues, socioeconomic conditions and the lawful framework on corporate law of a country .These powers may counteract changes as corporate law from affecting noteworthy change in a nation’s general administration scheme. This new pattern in the convergence debate better confines the truth of corporate governance convergence in practice. Although these studies have been noteworthy, a great part of the world, and especially the latest line of changes, have yet to be completely concentrated on. Shockingly little consideration has been paid to corporate administration changes in as of late rising economies, especially India.

CHAPTER 3: Divergence in codes of corporate governance

It is now widely accepted that corporate governance systems vary across nations. Ownership and board structure, managerial incentives, the role of banks and large financial institutions, the size and development of stock markets, company law, securities regulation, government involvement and other important aspects of corporate governance have been found to differ across nations (e.g. Baums 1994;Roe 1994;Prowse 1995; Gugler 2001;Vives 2000;Barca and Becht 2001).

The fact that corporate governance codes differ from nation to nation is a widely accepted notion. It has been said that the following aspects make corporate governance codes to differ from one another (Vives 2000;Barca and Becht 2001):

Ownership
Structure of the board
Incentives provided by the management
Role played by financial institutions and banks
Laws, rules and regulations.

Peculiar distinctions have been pointed out amongst the “market based models” of the United Kingdom and the United States and the ‘bank-based ’or ‘control-based ’) models of Continental Europe and Japan.

“Market-based systems are thought to be characterized by large and liquid stock markets, dispersed ownership, relatively high levels of minority investor protection (La Porta et al.1998) in addition high product-market competition (Roe 2000), one-tier boards (e.g. Allan and Gale 2000) and performance-sensitive executive pay (Murphy 1999).”

“Control-based systems of Continental Europe are characterized by lower levels of investor protection, smaller and less liquid share markets, more concentrated ownership and a larger share of stock held by (founding) families, corporate investors (cross holdings) and governments (Barca and Becht 2000).”

Several attempts have been made to elaborate the reasoning and logic behind the existence of these differences and these can be summed up as follows:

Legal system (La Porta et al.1999)
Political intervention (Roe 1991)
Cultural differences (Licht 2001).

Further, the popular economic theory is indicative of the fact that deviations and diversity exist because of “variations in market size, firm size, uncertainty and industry structure” (Thomsen and Pedersen 1999).

Even though the Anglo-American system possesses more preachers and is superior to other models yet there are segments of the population that support other models of corporate governance such as the ones prevailing in countries such as France, Germany, Scandinavian and Asian Countries. The segment supporting other models is of such opinion primarily because of the method with which these models deals with the issue of alignment of interests of shareholders and the management. In countries following common law, the persisting problem is solved by “monitoring by the market for corporate control and regulation forcing managers to follow the interests of the shareholders, civil law countries mainly rely on large shareholder, creditor or employee monitoring.”

CHAPTER 4: The convergence vs divergence debate

It has been in the last two decades that reforms in the corporate governance framework have materialized as focal point in corporate law in nations moving across the path of development. Scholars and academicians who have been for long engaged in the studies of these reforms have time and again made deliberations on the issue whether reforms in corporate governance will lead to one corporate governance model converging towards the other, namely the dispersed shareholder model or the Anglo-American model, or if convergence will be impeded due to circumstances varying from nations to nations.

There has always been a heated debate on whether the diffusion of codes of good governance worldwide has resulted into greater convergence towards a particular system of corporate governance (market oriented or large-shareholder oriented or whether, on the contrary, differences in corporate governance system have been reinforced by the issuance of codes of corporate governance. The debate on convergence and divergence is more complex than it seems and there are also interactions at multiple-levels that complicate the discussion.

It was laid out by both Cuervo (2002) and Reid (2003) that in spite of the existence of a starking level of difference in codes across nations there has been an increase in confluence of codes and they laid out the flowing reasons for the same:

Globalization
Liberalisation of market
Advent of significant foreign investors
Endorsements by international organisations on ideal practices

The corporate governance reforms in certain countries have shown trends wherein they have reflected efforts to adopt the Anglo-Saxon model, its corporate practices and global benchmarks (Roberts, 2004). These efforts have been especially visible in countries which are on the path of development due to two main reasons which are:

Privatization of corporations
Need for foreign investment

The OECD (Organization for Economic Cooperation and Development) developed the OECD Principles of Corporate Governance which provide a framework and mechanisms for the much needed corporate governance reforms so as to aid the developing nations adopt and take up codes of good governance (Kapardis and Psaros, 2006).

However, at the same time it is essential to throw light on the fact that every code of governance entails in itself a certain salient features which are peculiar to the country to which it belongs (Aguilera and Cuervo-Cazurra, 2004). Academicians and scholars claim that have point out that it is not possible to have one particular model that suits all. It is due to this reason that, Reaz and Hossain (2007) have contended that more responsiveness should be directed towards developing economies as their approach towards corporate governance needs to be turned around. Okike (2007) contends that in these developing nations it is not the most suitable tool to reproduce governance practices followed in Western countries. The code of governance should be indicative of the economic and socio-political factors prevailing in the country in which the corporation operates.

“Most convergence theory scholars advance the primacy of the Anglo-American model of governance, arguing that this model is the “endpoint of an evolutionary development” and is “both desirable and inevitable.”[7]”

It is further contended by these scholars that if corporate governance codes converge into the Anglo-American model, it will not only benefit the nations but the corporations as well. they further say that there will be a surge in the global competing ability of the firms if uniformity is maintained and convergence is undertook in an environment where there persists “globalization and the increased interdependence of financial markets around the world”.

However, there are a number of opponents of the convergence theory. Some opponents argue that not only is there a lack of convergence toward a shareholder-oriented/dispersed ownership model, but that theories of convergence reflect U.S. economic imperialism.[8] Other opponents, most notably Professors Roe and Bebchuk, argue that such convergence is not possible because “path dependency” creates significant obstacles to convergence.[9] As Professor Coffee articulated, path dependence theory argues that “history matters, because it constrains the way in which institutions can change, and efficiency does not necessarily triumph.”[10]

At the same time, the convergence theory possesses a number of opponents as well. it is argued by them that there is a “shortfall in of convergence toward a shareholder-oriented/dispersed ownership model” but also” it is indicative of the US Economic colonialism.[11] Notable Professors Roe and Bebchuk, argue that such convergence is not possible because “path dependency creates significant obstacles to convergence.”[12] As Professor Coffee articulated, path dependence theory argues that “history matters, because it constrains the way in which institutions can change, and efficiency does not necessarily triumph.”[13]

In totality, it can be said that there are some aspects of corporate governance reforms which signal movement and confluence towards the popular Anglo-Saxon model. But at the same time good governance is also affected by peculiar factors prevailing in a nation. Hence, we can say that there is no one such code that will suit the whims and fancies of all the nations.

CHAPTER 5- Comparative Corporate Governance

“To understand the field of CCG, we must first clarify how the field understands the notion of corporate governance itself. Corporate governance can mean many things to many people, and the definition typically will depend on what the definer cares about. I canvass some definitions below in order to clarify what CCG typically excludes as well as includes.6 The simplest definition may be that of the (British) Committee on the Financial Aspects of Corporate Governance in the Cadbury Re port, which defines corporate governance as “the system by which companies are directed and controlled.”Economist Margaret Blair also supplies a broad definition: “the whole set of legal, cultural, and institutional arrangements that determine what publicly traded cor porations can do, who controls them, how that control is exercised, and how the risks and returns from the activities they undertake are allocated.”Institutional economists favor a narrower definition. Oliver Wil liamson, for example, sets out in his chapter on corporate governance to examine the relationship between the firm and what he calls its constituencies: labor, capital (equity and debt), suppliers, customers, the community, and management.This conception of corporate gov ernance in essence tries to cover all who participate in some way in the process by which a firm’s product is produced and sold. It sees these parties as voluntarily interacting with the firm, and asks what the terms are on which they interact as well as why those terms look the way they do. “Governance” in the work of Williamson and others of the same school refers to the institutional structure parties set up to deal with the inevitable incompleteness of their contracting, and attempts to explain voluntary relationships in those terms. Finally, some scholars use a quite narrow concept of corporate governance. This concept is concerned with issues of finance and agency cost and has a policy component: the prevention of the ex ploitation of those who supply the money by those who control it.”

The rationale of comparitive corporate governance can conceivably best be discribed by reading its history.[14]

Though CCG evolved into its picture in 1990s, its contemporary reform-oriented adaptation can be looked back to 1960s and 1970s.
Since the time Berle and Means published “The Modern Corporation and Private Property”, corporate law research and scholarship of America has been focal pointed on the notion of separation of ownership and control, as well as on the modes of mitigating the issues resulting by this separation. Though the problems obstinately existed, and it was seemed to be impossible that directors can ever justly play a noteworthy and considerable role in management of the corporation, having their limitations of time and info in the background.
The late 1960s and early 1970s thereby saw essentially desertion and rejection of “the ideal of the man aging board; the board was reconceptualized as a body that monitored but did not manage. As part of this shift in thinking American academics began to look in particular at the German sys tem of a two-tier board.At the same time, CCG scholarship remained largely doctrinal, focusing on differences in rules.Ronald Gilson”wrote that before the globalization, the arena of research and cholrship had the intent of cataloguing all the central features of the national corporate governance systems, and regular modifications came into picture-

“First, in 1976, Jensen and Meckling’s seminal article, Theory of the Firm: Managerial Behavior, Agency Costs, Ownership Structure, then second Mark Roe’s work on the political roots of American corporate ownership patterns and associated governance institutions then thirdly the lifetime employment system in Japan explained variously as venerable disease”

All this turned focus of corporate law scholars in the U.S. to problems of agency cost and ownership construction. Also it suggested that corporate governance is not merely a subject of market-driven progress towards most favourable set arrangement but on product of state and political choice.
This all concluded that the enterprises of any particular country were not essentially the most competent ones and so research into substitutes can have real payoffs.
Finally, as globalization increased problems of national competitiveness became salient, and the scholars viewed governance systems as competing just in the same manner as the products do.
CCG study started to proliferate in 1980s and 1990s. When Japan and Germany were riding high economically in the 1980s, there was great interest in the apparent strengths of German and Japanese models and what was thought to be their contribution to economic performance both at the corporate and at the national level. Some scholars produced studies of the monitoring benefits of the Japanese main bank systemand keiretsu structure,while others argued that American equity mar kets forced executives to focus on quarterly results whereas “the bank centered capital markets of Germany and Japan allowed executives to manage in the long run.”In a word, Japan and Germany going to eat our lunch unless we improved our corporate governance system.
the research memo of CCG had almost been crystallized and in the words of two leading scholars in 1999,

“In globalizing times, corporate law’s leading question is whether there is national corporate governance system that possesses relative competitive advantage.The second question that what the future would bring: if one model was better than another, would national corporate governance regimes converge? Or would national differences remain?”

Although there wasnt any lack of detailed studies but the question of convergence still remained unsettled.In this chaos of uncertainty and indecision,“Hansmann and Kraakman in 2000”flipped their bombshell, named

“The End of History for Cor porate Law”:the debate was over, U.S.-style corporate governance had won, convergence had already taken place at the ideological level, and formal convergence was “only a matter of time.”I shall return to this claim later.”

“Alongside the discussion of convergence, carried on largely by legal scholars, was a parallel research agenda carried on largely by economists that sought to draw causal links between features of a country’s legal system?in particular, its rules about corporate governance?and various economic indicators. This body of research was launched in the late 1990s by Rafael La Porta, Florencio Lopez-de Silanes, Andrei Shleifer, and Robert Vishny (LLSV) with several articles on law, finance, and corporate governance,and the authors have continued, both together and with other collaborators, to produce research in this vein in subsequent years. While the methodology of this research has been criticized,it is sufficient for present purposes to note that its conclusion?that law mattered? added new urgency to the quest for optimal corporate governance rules.”

CHAPTER 6: The corporate governance code in India and proof of convergence

In the past two decades, nations moving across the path of development have undertaken to reform their corporate governance framework. This has resulted in grave concerns round the world regarding the nature and scope of standards of corporate governance. [15]

One of the crucial aspects of this issue is whether convergence of corporate governance regulations towards another model us caused by globalisation. Proponents of the convergence theory contend that mostly codes are converging towards the Anglo-American model as it is considered to be the most efficient. [16]

Thus, India’s rapid economic transformation has been accompanied by significant reforms in its corporate governance laws.

The need for corporate governance reforms was felt due to the following reasons:

India’s expanding economy and its needs
Access to FDI
Presence of institutional investors
Targets of Indian companies to function in a globalised world

It is because of these reasons that the rapid transformation of the Indian economy has alongside witnessed reforms in coproate governance framework.

It was the 1990’s that the Securities and Exchange Board of India (SEBI) was constituted which there on created several committees with intent to develop new and reformed corporate governance standards. Extraordinary corporate governance reforms were introduced by SEBI by the introduction of Clause 49 of the Listing Agreement 12 of Stock Exchanges. [17]

Clause 49 was a revolutionary reform which bought about many corporate governance requirements with respect to the Board and Disclosure required to be made to shareholders. It is referred to as “watershed event in Indian corporate governance“. It was Clause 49 that put the put India on the path of confluence towards the Anglo-American model. Clause 49 bears many similarities to the framework in United States and the United Kingdom, some of them being:

“Internal controls and disclosure with respect to governance matters
Minimum number of independent directors
CEO/CFO certification of financial statements
Independent audit committees”

There are striking similarities between clause 49 and the popular Anglo-American Corporate Governance Model and the Cadbury Committee report, the OECD principles on Corporate Governance and the Sarbanes-Oxley Act.

Clause 49 and the Cadbury Report bear significant similarities in the obligations they each impose on companies which are as follows:

The board of directors,
Disclosure requirements and
Internal controls

The scope of clause 49 is much narrower with respect to OECD principles. Clause 49 does reverberate some of the sanctions laid out in the OECD Principles. Similarities are particularly evident in the following provisions which relate to the:

Board of directors
General board responsibilities
Assignment of nonexecutive directors to financial reporting (audit),
Nomination, and remuneration committees

Lastly, Sarbanes Oxley Act and Clause 49 bear significant resemblances especially with respect to board matters and audit committee issues. Following provisions can be said to bear many a similarities:

Independent director
Composition of audit committees
Disclosure provisions
Internal control provisions

CHAPTER 7-Conclusion

There has been a sharp and long debate in order to find out a desirable and ultimately most favourable corporate governance which is applicable and which could be a standard and classic system for entire world. And precisely it seems that“global convergence of corporate governance toward Anglo-American shareholder-oriented model is in progress or even almost completed. After examination of the barriers to convergence on corporate governance and forces impelling convergence, John C. Coffee Jr. found both “powerful” and observed that “functional convergence should dominate formal convergence.””

Therefore the notion that comes out is that finding out a single optimal system or model of corporate governance is not possible. His comment that the functional convergence must govern the formal convergence is to be understood as that even though it isnt possible to articulate a singular and apt model of corporate governance in certain parts of fundamental functions of corporate governance system we need to be able to difficult or not possible to find a single, optimal formal corporate governance model, in many parts of basic functions of corporate governance systems around the world, one should be able to recognize and characterize more eagerly the general guidelines and strategy to discover the desirable and enviable corporate convergence. In short, all we need is an international benchmark for corporate governance, but we can not uncover an ultimate and desirable model for all and it is more imperative to find practical, a more general, fundamental and basic guidelines for desirable corporate governance on a international level, not the mandatory choice of explicit corporate governance among two dominant shareholder orient and concentrated ownershipmodels.

Optimal corporate governance model can be articulated under these fundamental guidelines to suit the environment of all countries.

Globalization has fostered the study of comparitive corporate governace. Globalization has hoisted the issue of whether or not a specific and particular model is most favourable i.e. optimal and also whether or not a given competition there might be certain form of convergence. Just as trade globalization has raised significant economic and policy issues, comparative corporate governance studies raise similar issues. To the extent that corporate governance systems influence good economic decisions and enhances investor confidence, one would expect it to have some effect on the models. However, corporate governance is one piece of the complex puzzle of what makes economies work. Whether a particular model of ownership or focus of corporate governance is necessary, adaptable or optimal remains unclear given the complexity of law, society and related issues.

References

Naciri, Introduction, in Corporate Governance Around the World 1, 12 (Routledge, New York, 2008).

Curtis J. Milhaupt, Property Rights in Firms, in CONVERGENCE AND PERSISTENCE IN CORPORATE GOVERNANCE 210 (Jeffrey N. Gordon & Mark J. Roe eds., Cambridge University Press 2004)

Douglas M. Branson, The very uncertain prospect of ‘global’ convergence in corporate governance, 34 Cornell Intl J. 321, 330-36 (2001)

Henry Hansmann, Reiner Kraakman, Toward s Single Model of Corporate Law?, in Corporate Governance Regimes Convergence and Diversity 56, 56 (Oxford University Press, New York, 2002)

Joseph A. Mccahery and Luc Renneboog, Introduction: Recent Developments in Corporate Governance, in Corporate Governance Regimes Convergence and Diversity 1, 1-2 (Oxford University Press, New York, 2002).

John C. CoffeeT Jr., The Future as History: The Prospects for Global Convergence in Corporate Governance and its Implications, 93 Nw. U. L. Rev. 642-643 (1999)

Jeffrey N. Gordon & Mark J. Roe eds.,Convergence and persistence in corporate governance (2004).

Janis Sarra, Corporate Governance in Global Capital Markets, Canadian and International Development, 76 Tul. L. Rev. 1714 (2002).

Joonki Kim, Discussion to Convergence of Corporate Governance in Developed Countries, in Good Corporate Governance, Winter Vol. 1

Mccahery and Renneboog, William W. Bartton and Joseph A. Mccahery,Comparative Corporate Governance and Barriers to Global Cross Reference, in Corporate Governance Regimes Convergence and Diversity 23, 24-25 (Oxford University Press, New York, 2002).

Troy A. Paredes, A System Approach to Corporate Governance Reform: Why Importing U.S.Corporate Law isn’t the Answer, 45 Win. & Mary L. Rev. 1064-1065(2004).

[1] Glossary of Statistical Terms, available at https://stats.oezc.org/glossary/detail.asp?ID=6778 (accessed on 20-08-2016 at 14:30 p.m.)

[2] Sir Adrian Cadbury, UK Commission Report: Corporate Governance 1992.

[3] Jeswald W. Salacuse, Corporate Governance, Culture and Convergence: Corporations American Style or with European Touch?

[4] Adolf Berle, Jr.& Gardiner C. Means, The Modern Corporation and Private Property (1932), quoted from Jeswald W. Salacuse, Id. at 35.

[5] Brian R. Cheffins, putting Britain on the Roe Map: The Emergence of the Berle-Means Corporation in the United Kingdom, in Corporate Governance Regimes Convergence and Diversity 147, 149(Oxford University Press, New York, 2002).

[6] Hwa-Jin Kim, International Corporate Governance 205-206 (Pakyoungsa, 2003).

[7] CONVERGENCE AND PERSISTENCE IN CORPORATE GOVERNANCE Jeffrey N. Gordon & Mark J. Roe eds., (2004).

[8] Douglas M. Branson, THE VERY UNCERTAIN PROSPECT OF “GLOBAL” CONVERGENCE IN CORPORATE GOVERNANCE, 34 CORNELL INT’L L.J. 321, 330-36 (2001)

[9] See Rafael La Porta et al., CORPORATE OWNERSHIP AROUND THE WORLD, 54 J. FIN. 471, 471-72 (1999);

[10] John C. Coffee, Jr., THE RISE OF DISPERSED OWNERSHIP, 111 YALE L.J. 1,4 (2001).

[11] Douglas M. Branson, THE VERY UNCERTAIN PROSPECT OF “GLOBAL” CONVERGENCE IN CORPORATE GOVERNANCE, 34 CORNELL INT’L L.J. 321, 330-36 (2001)

[12] See Rafael La Porta et al., CORPORATE OWNERSHIP AROUND THE WORLD, 54 J. FIN. 471, 471-72 (1999);

[13] John C. Coffee, Jr., THE RISE OF DISPERSED OWNERSHIP, 111 YALE L.J. 1,4 (2001).

[14] DAVID HELD & ANTHONY MCGREw, GLOBALIZATION, OXFORD COMPANION TO POLITICS OF THE WORLD 324 (Joel Krieger ed., 2001).

[15] See, Jeffrey N. Gordon & Mark J. Roe eds., CONVERGENCE AND PERSISTENCE IN CORPORATE GOVERNANCE (2004).

[16]Paul Davies & Klaus Hopt, Control Transactions, in THE ANATOMY OF CORPORATE LAW: A COMPARATIVE AND FUNCTIONAL APPROACH 157, 172 (Reinier Kraakman et al. eds., 2004)

[17] CIRCULAR, SECURITIES AND EXCHANGE BD. OF INDIA, AMENDMENTS TO CLAUSE 49 OF THE LISTING AGREEMENT (Sept. 12, 2000), available at http://web.sebi.gov.in/circulars /2000/CIR422000.html