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Finance and Economics Discussion Series
Finance and Economics Discussion Series logo links to FEDS home page Is Corporate Governance Ineffective in Emerging Markets?
Michael S. Gibson

Abstract: I test whether corporate governance is ineffective in emerging markets by estimating the link between CEO turnover and firm performance for over 1,200 firms in eight emerging markets. I find two main results. First, CEOs of emerging market firms are more likely to lose their jobs when their firm's performance is poor, suggesting that corporate governance is not ineffective in emerging markets. Second, for the subset of firms with a large domestic shareholder, there is no link between CEO turnover and firm performance. For this subset of emerging market firms, corporate governance appears to be ineffective.

Keywords: Management turnover, performance, ownership, concentration

Full paper (335 KB PDF)

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Last update: December 11, 2002