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Comparative analysis of corporate governance laws and practices in developing and developed economies


Despite the proliferation of management theories, management experts, and management curricula during the 20th century, corporate governance did not receive the adequate amount of attention that it deserved. Corporate Governance is the defining characteristic of the current era of business, which began in the twentieth century and has reached its zenith in the twenty-first. As a result of many high-profile corporate crises, the term “Corporate Governance” has been added to the rule books of business as a way to ensure the long-term health of the economy. This was done as a way to protect shareholders and investors from being taken advantage of by unethical business practices. Different types of corporate governance are utilized by many economies, each of which is characterized by its own unique culture, environment, and other characteristics. When the urge for financial gain is the driving force behind the decisions of corporate executives, there is a greater risk of regulatory limits being disregarded or abused. This researched article investigates whether or not laws pertaining to corporate governance are successful in preventing the collapse of businesses. To determine where developing economies are lacking in terms of their corporate governance regulations and practices, comparisons are made between those economies and developed economies. Because of this, I wrote this researched article to provide a side-by-side comparison of the corporate governance standards utilized in developing economies and developed economies.


Corporate governance is an umbrella phrase that encompasses several different aspects of a business, including its rules, management, and activities. Ensures that the diverse interests of the company’s stakeholders, including management, shareholders, suppliers, financiers, customers, the government, and the community, are taken into consideration and balanced. It offers a framework for accomplishing the objectives set out by the organization, beginning with the formulation of action plans and internal controls and continuing through performance evaluation and corporate disclosure. It is common knowledge among economists that effective corporate governance has a direct and substantial impact on the bottom line of a corporation. This expansive definition encompasses both internal and external factors. External factors include legal and regulatory, economic, cultural, and societal factors like political corruption and the structure of ownership and the accounting system. Internal factors include a diverse and competent board of directors, independent auditors, and the ability to exercise control by shareholders. However, the majority of research concentrates on internal problems.

I conducted a comparative analysis of corporate governance legislation and practices in developing and developed economies, with a particular emphasis on corporate social responsibility and sustainability reporting, to examine the link between successful corporate governance structures. This was done to examine the link between successful corporate governance structures. In the research piece that I have been working on, the topic of corporate governance is examined via the lens of transparency and monitoring. As a direct result of globalization, an increasing number of corporations are expanding their operations into developing nations such as India and Hungary, amongst others, to capitalize on the enormous unrealized market potential. This fact is what prompted the need for the research presented in this article.

Key Principles of Corporate Governance

Companies and organizations are regulated by a set of rules, regulations, and decisions termed corporate governance. The company’s decision-making process includes shareholders, management, consumers, suppliers, and investors. Its broad scope includes action plans, internal controls, performance measurement, and corporate transparency. it encompasses Disclosure is publishing (both good and bad) financial, operational, and management remuneration information to promote fair investment. The National Association of Corporate Directors (NACD) in Washington, D.C. has more than 17,000 members and promotes effective board leadership via education and networking.[1] A competent and dedicated Board of Directors must monitor the corporate governance system, focusing on “long-term wealth generation” and openness through disclosure of governance practices deviations from best-practice guidelines and communication with investors. The directors should have diverse backgrounds, abilities, experiences, and perspectives to promote debate before reaching a decision. Shareholders must govern the board to ensure it is responsible, impartial, and can objectively oversee management. Organizing executive meetings with independent and outside directors is one method. To ensure the board’s independence, an independent chairperson is appointed. Integrity, ethics, and accountability must be fostered via corporate governance policies. These processes allow the board to determine priorities, create agendas, and gather data to help management. Corporate governance requires constant board turnover to prevent entrenchment. Age and term limits, voluntary resignations, renominations, and periodic reviews can help accomplish this.

Connecting Corporate Governance in developing and developed economies

Business relationships between developed economies and developing economies have been enhanced as a result of the continuous outsourcing of information technology requirements from developed economies to developing economies. The information technology outsourcing industry in India is currently worth over $150 billion and is growing at a pace of 12 percent annually.[2] Corporate governance mishaps such as the Enron[3] and Satyam[4] cases are the clearest illustrations of how corporate governance can go wrong in both developing and developed countries.

Structure of the Board of Directors in developing and developed economies

Even in industrialized nations, the structure of the board of directors has become less relevant to the modern business environment. There are many people in both economies who are in favor of splitting the roles of chairman and CEO into two distinct positions. However, in the context of CEO succession planning, more firms in both economies are increasingly focusing on the combination of chairman and CEO duties. These firms believe that the combination of the roles improves communication with shareholders, which in turn reduces the likelihood of confusion and duplication in the role of chairman and CEO.

Board representation of women and minorities in developing and developed economies

A more diverse and inclusive board must include a greater number of women and minorities, as well as independent directors with a range of backgrounds, viewpoints, and expertise. Fortune 500 corporations with higher percentages of female board directors have also shown better financial results than those with lower percentages of female board directors. As a result of engrained business conventions, long hours, and childcare responsibilities that continue to rest on mothers’ shoulders, fewer women and minorities hold executive positions and are underrepresented on corporate boards. However, corporations in both developing and developed economies have been hesitant to shift away from a male-dominated workplace.


This research article gives a summary of the transparency and monitoring of the corporate governance models used in both developing nations and economies that have already achieved a certain level of economic development. This study only skims the surface of the topic because it was conducted with such limited resources as time and money. Further research into this matter may be conducted in the future. The expanding ties between the developed and developing economies necessitate more research on this subject. This researched article is necessary to assist the enterprises that are moving between the two economies. According to the findings of this researched article, there are significant differences between the corporate governance models used in developing nations and those used in developed economies because of the differences in the cultural norms and economic environments. There are significant differences in governance between developing economies and developed economies, except for a few factors. These factors include the presence of women and minorities on the board, full disclosure and certification of financial statements, board leadership structure, and the presence of independent directors on the Board of directors. Companies and investors must be cognizant of the differences between the two economies.

[1] Pallak Bhandari, Corporate Governance A Comparative Analysis in India and the US, BRYANT DIGITAL REPOSITORY (July. 19, 2022, 9:29 AM),

[2] Chakrabarti, Rajesh, Megginson, William L, Yadav, Pradeep K., Corporate governance in India, CFR WORKING PAPER, 08-02 (2007)

[3] Rezart Dibra, Corporate Governance Failure: The Case Of Enron And Parmalat, CORE (July. 19, 2022, 09:50 AM),

[4] J.P. Singh, Naveen Srivastav, Shigufta hena Uzma, Satyam Fiasco: Corporate Governance Failure and Lessons Therefrom, RESEARCHGATE (July. 19, 2022, 10:10 AM),

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