Does Law Matter in Asia? Comparing Corporate Governance Regimes in Indonesia and Malaysia

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Abstract

The question, “Does law matter?” reflects a fundamental concern of whether law is worth the attention and invest-ment of public authorities. Often implied in the discussion is that other institutions, whether markets or informal established social practices, are preferable methods for organising the economy and may well do a better job of sat-isfying individual needs. This paper investigates the proposition that law does matter even in the Asian context where strong informal social practices persist by examining the corporate law of two very similar countries—Indo-nesia and Malaysia—that have such social practices. Using these two countries allows us to control for non-legal factors that significantly influence economic performance to provide evidence of whether law matters. Using empir-ical methods, we analyse data from the latest 10 year normal period (ie prior to COVID-19 disruption) and find that adoption of laws consistent with G20/OECD Principles of Corporate Governance substantially contributes to a juris-diction’s economic performance at least as measured by stock market performance.

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How to Cite
1.
Sheehy B, Yu S, Lie L. Does Law Matter in Asia? Comparing Corporate Governance Regimes in Indonesia and Malaysia. LiC [Internet]. 2023Mar.9 [cited 2023Oct.1];38(1). Available from: https://journals.latrobe.edu.au/index.php/law-in-context/article/view/194

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