Publication: Who Controls East Asian Corporations—and the Implications for Legal Reform
Date
1999-09
ISSN
Published
1999-09
Author(s)
Claessens, Stijn
Djankov, Simeon
Lang, Larry H. P.
Abstract
This Note reports an analysis of
ultimate control in nearly 3,000 publicly traded companies
in December 1996-before the financial crisis-in nine East
Asian economies: Hong Kong, Indonesia, Japan, the Republic
of Korea, Malaysia, the Philippines, Singapore, Taiwan
(China), and Thailand. The analysis shows that the ten
largest families in Indonesia, the Philippines, and Thailand
control half the corporate sector (in terms of market
capitalization), while the ten largest in Hong Kong and
Korea control about a third (figure 1). More extreme, in
Indonesia and the Philippines ultimate control of about 17
percent of market capitalization can be traced to a single
family. While the analysis shows that ownership
concentration in these countries is in keeping with levels
in other developing and some industrial countries, its
findings shed light on the viability and vulnerability of
corporate governance structures in East Asia. The
concentration of corporate wealth and the tight links
between corporations and government may have impeded legal
and regulatory development, directly or indirectly. To
create incentives for better governance, East Asian
governments may have to promote more competition, even by
breaking up conglomerates, and curtail related party lending
by restricting ownership of banks.
Citation
“Claessens, Stijn; Djankov, Simeon; Lang, Larry H. P.. 1999. Who Controls East Asian Corporations—and the Implications for Legal Reform. Viewpoint. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/52f3761c-6252-58f4-80dd-3d1b3a91b378 License: CC BY 3.0 IGO.”
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