Effects of ethical practices on corporate governance in developing countries

Abstract

Companies in some developing countries, such as those in the Middle East and North Africa region, do not place high importance on ethical behavior and practices within the organization. The aim of this study is to examine the effects of ethical behavior and practices within small and medium size enterprises (SMEs) in developing countries on promoting good corporate governance. Data collected in Lebanon and Egypt provided evidence that ethics impact all major corporate governance categories. A deeper analysis of the relationships enabled the profiling of SMEs with lower levels of corporate governance relative to Ownership Structure. The findings created a path for useful recommendations to enhance corporate governance, in particular the Ownership Structure category, through adopting expedient ethical practices.