Article at a glance:

Improving board performance in emerging markets

• The need for well-functioning boards is especially urgent in emerging markets because institutions that wish to promote good corporate behavior are often weak there.
• But since directors and shareholders in these regions face unique challenges, the wholesale adoption of Western corporate-governance practices isn't necessarily the right answer.
• Six features of emerging markets significantly influence the effectiveness of boards there: a high concentration of ownership, weak recruitment processes and a shortage of experienced directors, poor focus, an inadequate supply of information, complex cultural traditions, and underdeveloped legal regimes.
• Overcoming these problems and creating a vibrant and constructive board environment will probably pay off in better performance and a lower cost of capital.