Institutional voids and financial markets: an institutional theory perspective

What the paper says

Purpose This study aims to examine how institutional voids across the regulative, normative and cultural-cognitive pillars shape governance failures in emerging financial markets. Using four major Indian corporate cases, the authors show how institutional weaknesses enable opportunistic behaviour, delayed enforcement, opaque disclosures and contested control transfers. Design/methodology/approach Using Siggelkow’s (2007) illustrative case approach, the authors analyse four prominent cases spanning four decades: Escorts–Caparo, Satyam, L&T–Mindtree and NDTV–Adani. Qualitative textual analysis (QTA) is applied to Supreme Court judgments, Securities and Exchange Board of India (SEBI) orders, regulatory filings and company reports to identify institutional voids. Voids are classified across seven sub-dimensions of institutional theory. Findings The findings demonstrate that governance failures arise not merely from weak regulations, but from patterned interactions among regulative gaps, normative weaknesses and cultural-cognitive misalignments. Systemic voids enable long-duration fraud (Satyam), selective voids create opportunities for indirect control (NDTV) and normative–cultural voids generate legitimacy conflicts even within functioning rules (Mindtree). Effective investor protection requires coordinated action across all three institutional pillars. Research limitations/implications The study relies on publicly available documents but offers transferable insights for researchers, regulators and policymakers seeking to strengthen governance systems in emerging markets. Originality/value To the best of the authors’ knowledge, this is the first study to systematically identify and compare institutional voids in Indian financial markets using institutional theory and QTA. It provides a structured diagnostic framework to enhance regulatory design, disclosure enforcement and governance oversight.