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The effectiveness of corporate governance enforcement is a complex issue requiring the understanding of the role of institutional factors. The latter may or may not converge towards best practices, depending upon the extent to which history and politics matter more than purely economic or efficiency‐related considerations for convergence. The appropriateness and effectiveness of corporate governance enforcement mechanisms differ among market economies and cannot be attributed to one single factor nor does any such factor have the same significance in all countries as it depends on the relative state of development of financial intermediation. This paper aims to address these issues.

A critique is launched on the hypothesis of legal conformity used to explain the deviation of corporate governance practices and enforcement efficiency from is considered as best practice. The critique follows an historical development approach and is substantiated with some new empirical evidence of ownership structures and market views.

Empirical evidence on ownership structures and on the market views regarding the effectiveness of corporate governance legislation shows that for an understanding of the relationship between financial intermediation and corporate governance broader institutional influences must be taken into consideration.

The analysis of empirical evidence needs detailed expansion and proper association with institutional elements to provide a more comprehensive understanding of corporate governance enforcement efficiency.

The exercise of corporate governance enforcement is an interactive process that goes beyond the role of legal rules and must combine an optimal set of private and public mechanisms properly tailored to each corporate governance regime.

New empirical evidence is provided on ownership structures and on the market view regarding the effectiveness of corporate governance legislation and a broader account is provided on institutional setting for understanding corporate governance policy.