The role of stock market in enhancing corporate governance of Share companies in Ethiopia
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Date
2024-09-30
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Addis Ababa University
Abstract
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.
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Additionally, promoting shareholder activism by strengthening rights and protections, offering corporate governance training, enhancing market infrastructure with digital platforms and investor protections