Reforming Corporate Governance in Ethiopia: Appraisal of Competing Approaches

Abstract

This article assesses various approaches available to policy makers to reform the corporate governance in Ethiopia. It reviews competing models of corporate governance including shareholder model of common law and stakeholder model of European civil law; and the regulatory (formal or mandatory) and non-regulatory (informal or voluntary) approaches of corporate governance. It also critically analyses the suitability of such approaches to an emerging economy like Ethiopia. Although corporate governance is important for all types of business organizations including small and closely held companies in Ethiopia, this article is limited to publicly held share companies whose shares are dispersed among a number of shareholders which give rise to separation of ownership and control that in turn exposes them to agency cost.