Financial sector convergence and corporate governance

Abstract

Purpose

To explore the implications of financial sector convergence for corporate governance systems.

Design/methodology/approach

Globalisation, regulatory harmonisation and pensions reform are driving convergence of bank and market oriented systems of corporate finance towards a hybrid model (“hybridisation”). Given the importance of financial systems in corporate governance, this may lead to convergence of corporate governance systems; legal traditions notwithstanding.

Findings

The growth in the importance of funds (pension, insurance, mutual, hedge, venture capital) and the decline in the importance of bank as shareholders has the potential for forcing convergence in corporate governance if the funds actively use their shareholder (or proxy) voting rights. Data on financial institution voting patterns is required to test the hypothesis.

Originality/value

Hybridisation is increasingly widely recognised, although not universally supported by the data. This paper attempts to draw the implication of the hybridisation process for corporate governance given the breakdown of traditional market and bank‐based systems.

Citation

Mullineux, A. (2007), "Financial sector convergence and corporate governance", Journal of Financial Regulation and Compliance, Vol. 15 No. 1, pp. 8-19. https://doi.org/10.1108/13581980710726750