Functional Convergence In Emerging Market Firms

Abstract

Functional convergence is the ability of firms to adopt best practices of corporate governance, independently of home country. This study demonstrates firm-level changes in board practices of large emerging market firms (EMNEs) despite controlling ownership structures, and provides insights on the relationships between practices and ownership. A uniquely constructed cross-sectional dataset includes 81 Global 500 EMNEs, representing 14 countries. Convergence is evaluated using regression for individual board practices, and through an Index of Functional Convergence to Anglo-Saxon standards (IFCAS). The Index operationalizes wholesale, rather than individual adoption of practices, as a continuous rather than dichotomous process.