Corporate Governance in Less Developed Countries

This paper argues that there is a pressing need for coherent analysis of the development and implementation of corporate governance (CG) codes in less developed countries (LDCs) in general, and Africa in particular. Africa has recently been argued to be the next focus of global economic growth and there is an urgent imperative to explore and understand the gulf between what is understood by CG in developed and less developed countries. Empirical evidence suggests that CG codes originating from Western countries may fail to operate effectively within Africa and other LDCs, raising the potential need for modification in order to be able to deliver the intended impact. This paper seeks to address this deficiency and develops a framework to guide LDCs scholars in understanding the key areas where the efficacy of Western inspired CG codes requires assessment. This framework is built upon five key CG themes emerging from an extensive review of the literature –- supervision and enforcement; boards of directors; shareholder rights; stakeholder relations; transparency and disclosure –= and the possible uses of this framework are explored. The paper aims to encourage conceptual coherence and enhance the comparability of research findings across a range of LDCs with heterogeneous institutional backgrounds.