Corporate governance effectiveness in the backdrop of regulatory inadequacies: implications for Bangladesh

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Abstract

This paper surveys extant finance literature pertaining regulatory implications for corporate governance effectiveness. It reveals that a weak market mechanism coupled with frail regulatory governance could potentially delimit corporate governance effectiveness through worsening information asymmetry environment as well as degenerating investor confidence, eventually creating negative behavioural effect on share prices of underlying firms. Using both theoretical evidences of market imperfection and regulatory inertia and referring Bangladesh as a perspective emerging economy, this paper suggests that corporate governance effectiveness in dealing with information asymmetry and investor confidence towards corporate performance in financial market could become an endogenous response to macroeconomic settings, particularly in developing and emerging economies.
Original languageEnglish
Pages (from-to)29-50
Number of pages22
JournalThe Cost and Management
Volume35
Issue number2
Publication statusPublished - 2007
Externally publishedYes

Keywords

  • Information Asymmetry
  • Regulation Fair Disclosure
  • Insider Trading
  • Moral Hazard
  • Agency Problem
  • Efficient Market Hypothesis
  • Over-reaction

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