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National Governance System, Corporate Ownership, and Roles of Outside Directors: A Corporate Governance Bundle Perspective


  • Toru Yoshikawa,

    Corresponding author
    • Address for correspondence: Toru Yoshikawa, Lee Kong Chian School of Business, Singapore Management University, 50 Stamford Road, Singapore 178899. Tel: +65 6828 0756; Fax: +65 6828 0777; E-mail:

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  • Hongjin Zhu,

  • Pengji Wang


Manuscript Type


Research Questions/Issues

We explore why and how the different combinations of governance practices at national level, such as the legal system, conduct codes, and capital markets, and at firm level, such as various types of controlling shareholders, enable or constrain outside directors to engage in their monitoring and resource provision roles. Building upon such analysis, we develop a new taxonomy of corporate governance systems according to the different configurations of a set of interdependent governance characteristics, including national governance mechanisms, identity of block shareholders, and functions of outside directors.

Research Insights

This study enriches the growing body of research on governance complementarity and substitution by highlighting the role of bundles of governance practices in influencing directors' engagement in governance behavior, and consequently advancing our understanding of variation in corporate governance systems across and within countries.

Theoretical/Academic Implications

This paper demonstrates that the roles of outside directors depend on the interaction between a bundle of governance mechanisms rather than any individual mechanisms. The paper also goes beyond the traditional governance models based on the national context and highlights that interdependencies of corporate governance practices play an important role in explaining the diversity and variation of corporate governance arrangements across firms in both industrialized economies and emerging markets.

Practitioner/Policy Implications

This paper provides insights to policymakers by suggesting that not all the governance bundles are conducive to managerial monitoring and resource provision by outside directors.