Journal Article

Corporate Governance and Development

Stijn Claessens

in The World Bank Research Observer

Published on behalf of World Bank

Volume 21, issue 1, pages 91-122
Published in print January 2006 | ISSN: 0257-3032
Published online February 2006 | e-ISSN: 1564-6971 | DOI:
Corporate Governance and Development

Show Summary Details


The literature shows that good corporate governance generally pays—for firms, for markets, and for countries. It is associated with a lower cost of capital, higher returns on equity, greater efficiency, and more favorable treatment of all stakeholders, although the direction of causality is not always clear. The law and finance literature has documented the important role of institutions aimed at contractual and legal enforcement, including corporate governance, across countries. Using firm-level data, researchers have documented relationships between countries’ corporate governance frameworks on the one hand and performance, valuation, the cost of capital, and access to external financing on the other. Given the benefits of good corporate governance, firms and countries should voluntarily reform more. Resistance by entrenched owners and managers at the firm level and political economy factors at the level of markets and countries partly explain why they do not.

Journal Article.  13038 words.  Illustrated.

Subjects: Development Planning and Policy

Full text: subscription required

How to subscribe Recommend to my Librarian

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.