The Relationship Between Corporate Governance Codes and Accounting Transparency in Emerging Capital Markets

Posted: Apr 09, 2011

• Sarah Wilson
• Scarlett Adams
• Scarlett Hernandez

Abstract

The relationship between corporate governance codes and accounting transparency represents a critical area of inquiry in emerging capital markets, where institutional frameworks are evolving and market efficiency depends heavily on information quality. Traditional research has predominantly approached this relationship through linear regression models examining governance indices against conventional transparency metrics. However, this conventional approach fails to capture the multidimensional nature of transparency and the complex, often non-linear, interactions between governance provisions and disclosure outcomes. Emerging markets present unique institutional contexts where formal governance codes interact with informal institutions, ownership concentration, and varying levels of market development, creating distinctive patterns of transparency that demand innovative analytical frameworks. This research introduces a novel methodological approach that transcends traditional governance-transparency analysis by integrating computational linguistics, network theory, and machine learning techniques. We conceptualize accounting transparency not merely as the quantity of disclosed information but as a multifaceted construct encompassing accessibility, comprehensibility, reliability, and contextual relevance. Our approach recognizes that governance codes operate within complex institutional ecosystems where their effectiveness is mediated by multiple contextual factors.