Reasons behind the worldwide diversity in identity and issuance of good governance codes

This study examines the impact of socio-economic factors on the number of good governance codes and issuers of the first codes at the macro-country level. By covering 3200 observations for 160 countries over 1995–2014, this study reports that countries with Anglo-Saxon culture and strong investor protection laws have developed a large number of good governance codes to meet the efficiency needs of legal, political, and cultural values. Moreover, this paper shows that countries with English common law origin alongside civil or religious law have developed a large number of good governance codes. Furthermore, this study indicates that countries with high regulatory quality index have issued a large number of governance codes as a response to the external forces that emerge from coercive associations. However, this study found a positive and significant association between the control of corruption index and the number of governance codes issued by governments to mitigate corruption risk. Additionally, this study reports that countries that issued a large number of good governance codes have gained substantial foreign direct investments inflows and financial aid. This study, therefore, provides meaningful implications for governments and policymakers in countries with weak regulations to issue new governance codes for protecting investors’ rights, thus gain more financial resources.