Reform, Financial Systems and Legal Frameworks
The CRC Series on Competition, Regulation and Development
Edited by Thankom Gopinath Arun and John Turner
Chapter 1: Corporate Governance and Development: Reform, Financial Systems and Legal Framework – An Overview
Thankom Gopinath Arun and John Turner INTRODUCTION The initial idea for this book emerged from a conference entitled Competition, Regulation and Development organized by the Centre on Regulation and Competition at the University of Manchester in November 2007. The selected papers from the conference have been revised based on editorial comments and in line with the main themes presented in the volume. We are greatly indebted to the contributing authors for making their work available to us and their cooperation in revising their drafts. Since the genesis of the corporation (or company), there has been a concern with what we now term corporate governance. Notably, even Adam Smith (1999) in The Wealth of Nations alludes to governance problems in early corporations. This book analyses the complex relationship between corporate governance and economic development by focusing on the reform of corporate governance, the role of the legal system in corporate governance, and the interconnections between corporate governance and the financial system. Although economists have typically viewed corporate governance as the ways by which investors assure themselves of getting a return on their investment, this book takes a broader view on the topic by developing a multi-dimensional perspective from disparate disciplines such as development studies, law, economics and finance. In the finance and economics literature, there has been considerable debate as to whether finance ultimately matters for economic growth (Levine, 2004). Adherents of the Modigliani-Miller school argue that it is real investments which matter, not how they are financed. For example, Lucas...
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