The collapse of Enron, WorldComand other major corporations in the early 2000s brought corporate governance (CG) considerations to the forefront.

•Good economic and corporate governance practices, including transparency in financial management, are now essential pre-requisites for: (i) promoting economic growth and reducing poverty; (ii) promoting market efficiency; (iii) controlling wasteful spending; (iv) consolidating democracy;and (v) encouraging private financial flow.

1)Empirically, high levels of transparency, as measured by indices of opacity, are found to be associated with lower country risk premiums and costs of capital, as well as higher trading volumes or liquidity.

2)Companies with less demanding corporate governance standards have been shown to experience higher capital costs and to pay greater risk premiums on their bonds.

3)Governance deficiencies have been shown to be associated with an increased probability that takeovers will not be successful, and with a greater fall in the share price of the acquiring firm.