Analyzing corporate governance at companies in emerging markets can be really tough. A combination of differing regulatory standards, disclosure requirements, market norms, local investor preferences, and more all collude to make the evaluation of governance structures difficult. Giving credit where due, emerging market economies have made significant corporate governance strides over the past decade, as the adoptions and revisions of governance codes and relevant regulations have led to better disclosure standards, higher levels of board independence, and more shareholder protections.

Despite these developments, emerging markets continue to have a unique set of characteristics which require special attention when assessing corporate governance at the country level and at the company level. At the country level, the legal framework, the strength of institutions, and the rule of law all affect the quality of governance of individual firms. And at the company level, ownership structures will often determine the types of governance challenges a company may face, as concentrated ownership may lead to potential risks of management entrenchment or the risk of expropriation of minority shareholders.

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