Codes of Good Governance Worldwide : What is the Trigger?

This paper examines why and how corporate governance practices are implemented across countries. We look at the worldwide development and adoption of codes of good governance, a set of best practice recommendations regarding the behavior and structure of the board of directors. We find that codes of good governance serve to compensate for deficiencies in the legal system covering shareholders' rights. The results also show that size of capital markets, degree of government intervention, and percentage of foreign investors in the stock market are predictors of the existence of codes of corporate governance, while country openness has no significant effect