Globalization and Similarities in Corporate Governance: A Cross-Country Analysis

Some scholars have argued that globalization should pressure firms to adopt the most efficient form of corporate governance; others maintain that such convergence will not occur because of path dependence. We find robust evidence that economically interdependent countries have similar corporate governance laws protecting stakeholders. In contrast, we find virtually no relationship between corporate governance practices and globalization in a battery of estimations at the country, industry, and firm levels. We conclude that globalization may have induced the adoption of some common corporate governance standards but these standards may not have been implemented. © 2006 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.