Corporate Governance and Development : An Update
What do we know about the links between economic development and corporate governance in emerging markets? Stijn Claessens and Burcin Yurtoglu have sifted through scores of academic studies on various countries, sectors, and business organizations...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
International Finance Corporation, Washington, DC
2017
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/613011468336854015/Corporate-governance-and-development-an-update http://hdl.handle.net/10986/26874 |
| Summary: | What do we know about the links between
economic development and corporate governance in emerging
markets? Stijn Claessens and Burcin Yurtoglu have sifted
through scores of academic studies on various countries,
sectors, and business organizations - from state-owned
enterprises to publicly listed companies - to determine how
corporate governance can influence economic development and
well being, and what is needed to promote good practices.
The Focus 10 draws on new evidence that has become available
since Focus 1: Corporate Governance and Development was
published in 2003. While the paper reviews research
literature, it is written to be accessible to the
nonacademic audience: board members, investors, government
regulators, development professionals, and other CG
practitioners. Research findings sited in the Focus include:
1) improved corporate governance practices increase firm
share prices; 2) operational performance is higher in better
corporate governance countries; 3) well governed companies
have less volatile stock prices in times of crisis; 4)
companies with boards composed of a higher fraction of
outsider or independent directors usually have a higher
market valuation; 5) improvements in corporate governance
quality lead to higher GDP growth, productivity growth, and
the increased ratio of investment to GDP; 6) when a
country's overall corporate governance and property
rights systems are weak, voluntary and market corporate
governance mechanisms have limited effectiveness; 7) large,
more concentrated ownership can be beneficial, unless there
is a disparity of control and cash flow rights; 8) the
quality of shareholder protection positively correlates with
the development of countries' capital markets; and 9)
better corporate governance leads to a better developed
financial system. The paper concludes by identifying several
main policy and research issues that require further study.
For example, more research is needed on family-owned,
state-owned or controlled firms that predominate in many
sectors and economies. For more publications on IFC
Sustainability please visit www.ifc.org/sustainabilitypublications. |
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