Corporate governance and life-cycles in emerging markets

Whereas the corporate life-cycle hypothesis posits that firms follow a structured set of goals along the life-cycle, some authors argue that corporate governance objectives vary independently of predetermined life-cycle stages. This study examines the impact of the corporate life-cycle on corporate governance in a special setting where firms can self-select into stricter rules by adopting an exchange listing level that fits the governance needs of the organization independently of the previously believed life-cycle requirements. Firms signal improvements in corporate governance by self-selecting into a more stringent listing level. The listing-level decision is a better predictor of corporate governance quality than corporate life-cycle. Firms indicate changes in corporate governance objectives by listing at the degree of regulation scrutiny that fits their current governance needs. The exchange listing level is a strong predictor of board structure quality, shareholder protection, disclosure requirements, and ownership structure. Firms determine the degree of regulation that matches the specific requirements at any point during their life-cycle.