Corporate Governance in a Developing Economy: Issues of Choosing the Right Approach (Rules or Principles)

by

Table of Contents

CHAPTER 1: INTRODUCTION1

Outline of the Study1

Background1

Research Aim and Objectives2

Research Questions2

CHAPTER 2: LITERATURE REVIEW3

The Importance of Corporate Governance3

Reasons Why Corporate Governance Has Received More Attention Lately5

Challenges Faced by Developing Countries, Emerging Markets, and Transition Economies8

Characterizing Principles and Rules9

CHAPTER 3: METHODOLOGY11

Research Design11

Literature Search11

Keywords12

Definition of Qualitative Research12

Research Method13

Literature Selection Criteria14

Search Technique14

Theoretical Framework14

REFERENCES15

Chapter 1: Introduction

Outline of the Study

This research proposal concentrates on the several facets of corporate governance and incorporates the following chapters:

Introduction

Literature Review

Methodology

Background

A huge debate is raging the world of governance these days as to how the level of trust can be improved in our communities in regards to the governance bodies of companies, aboriginal communities, charitable corporations, and so on. While there are many debates that are presently in progress, the most important ones are playing out in global communities, with other companies taking lead from there. Though these debates might seem a little off topic from the daily governance responsibilities, it actually is not. By understanding the different point of views and underlying rationales can help the board of directors to develop practices and policies that improve the governance of their organization and thus improve community's trust in the organisations leadership. In this study we assess the issues that organisations face while choosing the right kind of corporate governance approach (i.e. rules-based or principles based approach).

Research Aim and Objectives

The aim of this research is to identify the issues of choosing the right corporate governance approach in developing economy. The two approaches that are under consideration are Rule-base and Principle-based corporate governance approach. In the light of this aim, the author will accomplish the following objectives:

To highlight the importance of corporate governance

To highlight the reasons for the attention corporate governance has received recently

To highlight the challenges faced by developing economies

To highlight the differences between rules and principles

To highlight the values and challenges of rules-based and principles-based approach

To highlight the issues that developing economies face while choosing the right corporate governance approach

Research Questions

The study will answer the following research questions:

Why is corporate governance important?

What are reasons behind the recent attention towards corporate governance?

What are the differences between rules and principles?

What are the values and challenges of the rules-based and principles-based approaches to corporate governance?

What are the issues that developing economies face while choosing the right governance approach?

Chapter 2: Literature Review

The Importance of Corporate Governance

When outside investors finance firms, there is always a risk that their investment will not materialize because managers or controlling shareholders expropriate them. Corporate governance provides the mechanisms that outside investors use to protect themselves against expropriation by insiders. One definition of corporate governance is given by Shleifer and Vishny, who state that corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment. (Scheifer and Vishny, 1997, 737-783)

Without protection for outside investors, corporations will have difficulty in raising the necessary capital at a reasonable price, and their growth will be ...