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CORPORATE GOVERNANCE, CORPORATE FINANCE AND STOCK MARKETS IN EMERGING COUNTRIES ESRC Centre for Business Research, University of Cambridge Working Paper 258 By Ajit Singh Queens College University of Cambridge, CB3 9ET as14@econ.cam.ac.uk March 2003 This working paper forms part of the CBR Research Programme on Corporate Governance: www.cbr.cam.ac.uk/research/programme2 Abstract This paper focuses on the inter-relationship between corporate governance, financing of corporate growth and stock market development in emerging countries. It explores both theoretically and empirically the nature of the inter- relationships between these phenomena, as well as their implications for economic policy. It concentrates on how corporate growth is financed, an area where the literature has identified important anomalies in relation to corporate behaviour and governance. The paper provides new information and analysis on this subject for the 1990s which it is shown leads to further anomalies from the perspective of extant economic theory. It also comments briefly on the recent research on the legal system, corporate laws, corporate governance and corporate performance. In considering the latter issues the paper examines more closely the evolution of the financing of corporate growth and of stock market development in the specific case of the Indian economy in the 1980s and 1990s. JEL Codes: F3; G30; G34 Keywords: Corporate Governance, Corporate Finance, Stock Markets, Emerging Countries Acknowledgements This paper was presented at the 3CL/CBR Conference,