Reasons behind the worldwide diversity in identity and issuance of good governance codes
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ORIGINAL ARTICLE
Reasons behind the worldwide diversity in identity and issuance of good governance codes Ibrahim Khalifa Elmghaamez1,2 Received: 2 April 2020 / Accepted: 6 October 2020 © Springer Nature Limited 2020
Abstract This study examines the impact of socio-economic factors on the number of good governance codes and issuers of the first codes at the macro-country level. By covering 3200 observations for 160 countries over 1995–2014, this study reports that countries with Anglo-Saxon culture and strong investor protection laws have developed a large number of good governance codes to meet the efficiency needs of legal, political, and cultural values. Moreover, this paper shows that countries with English common law origin alongside civil or religious law have developed a large number of good governance codes. Furthermore, this study indicates that countries with high regulatory quality index have issued a large number of governance codes as a response to the external forces that emerge from coercive associations. However, this study found a positive and significant association between the control of corruption index and the number of governance codes issued by governments to mitigate corruption risk. Additionally, this study reports that countries that issued a large number of good governance codes have gained substantial foreign direct investments inflows and financial aid. This study, therefore, provides meaningful implications for governments and policymakers in countries with weak regulations to issue new governance codes for protecting investors’ rights, thus gain more financial resources. Keywords Codes of good governance · Legal origins · Worldwide governance indicators · Hofstede’s cultural dimensions · Foreign direct investment · Financial aids
Introduction Codes of good governance vary remarkably across countries. This is because each code developed by a country is mainly issued to address certain corporate governance issues related to the country (Lucia and Liliana 2010). Therefore, codes of good governance are different between nations owing to the impact of several institutional factors including cultural, political, legal, and economic factors (Cabeza-García et al. 2019). Similarly, good governance practices have been globally influenced by external market forces including international corporations, stock markets, and international bodies, such as the World Bank and IMF (Aguilera and * Ibrahim Khalifa Elmghaamez [email protected] 1
Economics, Finance and Accounting Department, Coventry Business School, Coventry University, Gosford Street, Coventry CV1 5DL, UK
Accounting Department, Faculty of Economics and Political Sciences, University of Tripoli, Ain Zara, Tripoli, Libya
2
Cuervo-Cazurra 2004; Zattoni and Cuomo 2008). However, some scholars argued that researchers should consider many institutional factors to fully understand the differences in developing corporate governance codes around the world. These institutional perspectives include cultural, geographica
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