Center for Federalism Studies

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    The role of stock market in enhancing corporate governance of Share companies in Ethiopia
    (Addis Ababa University, 2024-09-30) Hagos Redae; Solomon Abay (Ass.prof)
    This study examined the role of stock markets in enhancing corporate governance practices among share companies in Ethiopia. In many economies, stock markets serve as a critical platform for promoting transparency, accountability, and regulatory compliance, all of which are central to strong corporate governance. Although Ethiopia lacks a fully operational stock market, the study explored the potential impact of establishing one on the governance structures of Ethiopian share companies. It discussed how stock markets could improve investor protection, foster better management oversight, and create more stringent regulatory frameworks.. By drawing on lessons from other emerging economies, this study provides policy recommendations aimed at aligning Ethiopia’s corporate governance landscape with international standards, thus promoting sustainable economic growth and investor confidence. To enhance corporate governance in Ethiopia, key recommendations include strengthening regulatory oversight by enforcing governance regulations and establishing an oversight body outside the financial sector, improving board and management selection through merit-based appointments, and increasing transparency with mandatory financial reporting and conflict-ofinterest disclosures. Additionally, promoting shareholder activism by strengthening rights and protections, offering corporate governance training, enhancing market infrastructure with digital platforms and investor protections, and aligning corporate governance with international best practices to attract foreign investment are essential. Implementing these measures will improve governance, boost investor confidence, and foster sustainable economic growth.