Corporate Governance in Emerging Economies: Role of the Independent Director

Abstract

The concept of â independent directorsâ first evolved in the U.S. and later received recognition in the U.K. Over the turn of the century, several other jurisdictions have embraced independent directors as an integral part of their corporate governance codes. These include emerging economies such as China and India.The U.S. and the U.K., which spearheaded the independent director movement, follow the â outsiderâ model of corporate governance, with dispersed shareholding. However, other jurisdictions such as China and India (to which the concept was transplanted) follow the â insiderâ model of corporate governance, with ownership and control held by cohesive groups of insiders. This dissertation analyses the implications of legal transplantation of the concept from the outsider model to the insider model and examines whether or not such transplantation of a corporate governance mechanism that works to address agency problems in one model would work to address agency problems in another model.