Publication: Stress Testing Corporate Governance
Loading...
Published
2018
ISSN
Date
2018-08-14
Editor(s)
Abstract
This compendium looks at the development of corporate governance since the financial crisis and asks whether governance rules and practices have developed in a way that positions companies better to address systemic risk. The occurrence of spectacular corporate scandals since the crisis—Tesco, Toshiba, VW, and Wells Fargo, and the many institutions affected by the LIBOR scandal—suggests that the governance lessons have not been learned, certainly not universally. So we ask,What more needs to be done? How can investors, regulators, and the concerned publics beassured that the board of directors is, in fact, practicing good corporate governance? This compendium look at stress-testing governance from several angles: systemic risk in the financial system, risk at the individual corporate level, and the differentiated challenge as exists between companies with dispersed ownership, family ownership, controlling shareholders, and state ownership.
Link to Data Set
Citation
“Sullivan, John D.; Muis, Jules; Montagnon, Peter; Duverne, Denis; Hashimi, Fuad; Bertin, Marcos E.J.. 2018. Stress Testing Corporate Governance. Private Sector Opinion;No. 41. © World Bank. http://hdl.handle.net/10986/30206 License: CC BY-NC-ND 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Corporate Governance of State-Owned Enterprises in Latin America : Current Trends and Country Cases(World Bank Group, Washington, DC, 2014-07)The main objective of this report is to provide a descriptive analysis of the current practices and trends of corporate governance of State-owned Enterprises (SOEs) in several Latin-American countries. It provides practitioners of SOE corporate governance with a stocktaking of current practices and trends in several Latin American countries, as well as international experiences and good practices elsewhere. This report intend to contribute to the discussion and growing interest on SOE corporate governance and to provide an impulse for further analytical work in this area. In most Latin American and Caribbean countries, the SOE sector contributes significantly to GDP and represents an important part of consolidated public expenditures. In several cases, the SOEs are also key and strategic actors in the country s economy providing essential goods and services and frequently hold a dominant market position in critical sectors, such as petroleum, electricity, and transportation. They also operate in competitive markets such as financial services, telecommunications, etc. SOEs are also increasingly under pressure, by both their governments and by international competition, to operate and achieve their goals more efficiently and effectively. Within this context, achieving good corporate governance practices is critical to SOEs effectively providing goods and services and achieving their short-, medium-, and long-term goals, within a sustainable fiscal framework. This report has been prepared with the direct collaboration of government officials involved in the SOE sectors of eight countries in Latin America and the Caribbean, and Spain. It is mainly based on financial information and other relevant data on the above-mentioned countries, covering the period from 2010 to 2013. As part of data collection for the report, representatives of the SOE sectors in Brazil, Chile, Colombia, Dominican Republic, Mexico, Panama, Paraguay, Peru, Spain and Uruguay, attended the Technical Workshop on SOE Supervision in Latin American and Caribbean Countries, organized by the SOE Monitoring Unit of Paraguay and the World Bank in December 2011 in Punta del Este, Uruguay.Publication Senegal : Report on the Observance of Standards and Codes (ROSC) : Corporate Governance Country Assessment(Washington, DC, 2006-06)This report provides an assessment of Senegal's corporate governance policy framework, enforcement, and compliance practices. It highlights recent improvements in corporate governance regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Senegal. The report identifies several key next steps that can be carried out in Senegal and that focus on implementation, including: (i) developing program to build awareness of the importance of corporate governance and to train directors in modern corporate governance principles; (ii) drafting a code of corporate governance; (iii) addressing governance weaknesses in the state-owned enterprises. A separate report reviews the special issues for the corporate governance of state-owned enterprises in Senegal; and (iv) revising the Organization for the Harmonization of Business Law in Africa (OHADA) uniform act for commercial companies (over the long term) to incorporate modern corporate governance principles.Publication Report on the Observance of Standards and Codes : Corporate Governance Country Assessment, Bulgaria(Washington, DC, 2002-09)Market capitalization of the Bulgarian Stock Exchange is low at four percent of gross Domestic Product, having fallen from a peak of seven percent in 1998. Similarly, market turnover remains low, even by the standards of transition economies. However in recent years, Bulgaria has made substantive concrete improvements in its legal and regulatory framework, in part in preparation of accession to the European Union. The Bulgarian National Securities Commission was established in 1996 and subsequent amendments to both the commercial and securities legislation strengthened the corporate governance framework. In particular, the 2001 revisions and amendments adopted in June 2002 substantially strengthened shareholder rights for "public" companies. In addition, proposed additional amendments will ensure pre-emptive rights of existing shareholders and will require legal entities to disclose both direct and indirect ownership interests in Bulgarian companies, where such interests are at five percent or more of the company. The assessment recommends three additional areas of improvements: 1) Amend the Commercial Law to establish a minimum quorum for shareholders' meetings and strengthen the duties of members of (supervisory) boards of directors. 2) Encourage private sector organizations and business associations to prepare a corporate governance code, encouraging improved corporate governance practices in the corporate sector. 3) Encourage the private sector to establish an Institute of Directors that could provide training and disseminate international practices for (supervisory) boards of directors.Publication The Russia Corporate Governance Manual : Part V. Special Focus Section(Washington, DC, 2004-09-17)The Russia corporate governance manual has been divided into and is published in six parts: (i) corporate governance introduced; (ii) good board practices; (iii) shareholder rights; (iv) information disclosure and transparency; (v) special focus section; and (vi) annexes model corporate governance documents. The first four parts contain chapters that focus on core corporate governance issues, such as a company's board structure, information disclosure practices, and shareholder rights. Part five focuses on corporate governance issues of particular importance in the Russian context, namely corporate governance concerns during a company's reorganization, within holding structures, and relating to enforcement. Part six, finally, offers practical tools in the form of model documents, for example company codes, by-laws, and contracts. All issues are closely examined through Russian law and regulations; the Federal Commission for the Securities Market's Code of Corporate Conduct (FCSM Code) Code and, when applicable, internationally recognized best practices. This manual also provides government officials, lawyers, judges, investors, and others with a framework for assessing the level of corporate governance practices in Russian companies. Finally, it serves as a reference tool for the educational institutions that will train the next generation of Russian managers, investors, and policy makers on good corporate governance practices.Publication Uses and Limits of Conventional Corporate Governance Instruments : Analysis and Guidance for Reform - Part Two(Washington, DC, 2009-06)This private sector opinion is organized in two parts. Part one, published in June 2009, examined the uses and limits of five conventional corporate governance instruments: transparency, independent monitoring, economic alignment, shareholder rights, and financial liability and suggested ways to improve their application. Part two, the essay that follows, recommends how policymakers should approach corporate governance reform generally, with a view toward strengthening the effectiveness of conventional corporate governance instruments. Drawing upon the lessons learned from analyzing the application of conventional corporate governance tools to different situations and contexts, policymakers can take a number of steps to improve corporate governance reform efforts, including: 1) calibrate reforms to fit the surrounding context; 2) assess how an instrument will influence the behavior and focus of the affected parties; 3) be prepared to take difficult decisions to resolve challenging corporate governance issues; 4) ensure coherence of tools employed with the legal, regulatory, and tax regimes; 5) employ 'carrots' as well as 'sticks' to improve corporate governance standards; and 6) focus on social incentives and values to complement existing governance instruments.
Users also downloaded
Showing related downloaded files
Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Digital-in-Health(Washington, DC: World Bank, 2023-08-18)Technology and data are integral to daily life. As health systems face increasing demands to deliver new, more, better, and seamless services affordable to all people, data and technology are essential. With the potential and perils of innovations like artificial intelligence the future of health care is expected to be technology-embedded and data-linked. This shift involves expanding the focus from digitization of health data to integrating digital and health as one: Digital-in-Health. The World Bank’s report, Digital-in-Health: Unlocking the Value for Everyone, calls for a new digital-in-health approach where digital technology and data are infused into every aspect of health systems management and health service delivery for better health outcomes. The report proposes ten recommendations across three priority areas for governments to invest in: prioritize, connect and scale.Publication The Russia Corporate Governance Manual : Part III. Disclosure and Transparency(Washington, DC, 2004-09-17)The Russia corporate governance manual has been divided into and is published in six parts: (i) corporate governance introduced; (ii) good board practices; (iii) shareholder rights; (iv) information disclosure and transparency; (v) special focus section; and (vi) annexes model corporate governance documents. The first four parts contain chapters that focus on core corporate governance issues, such as a company's board structure, information disclosure practices, and shareholder rights. Part five focuses on corporate governance issues of particular importance in the Russian context, namely corporate governance concerns during a company's reorganization, within holding structures, and relating to enforcement. Part six, finally, offers practical tools in the form of model documents, for example company codes, by-laws, and contracts. All issues are closely examined through Russian law and regulations; the Federal Commission for the Securities Market's Code of Corporate Conduct (FCSM Code) Code and, when applicable, internationally recognized best practices. This manual also provides government officials, lawyers, judges, investors, and others with a framework for assessing the level of corporate governance practices in Russian companies. Finally, it serves as a reference tool for the educational institutions that will train the next generation of Russian managers, investors, and policy makers on good corporate governance practices.Publication Developing and Implementing Corporate Governance Codes(Washington, DC, 2008-12)In recent years, voluntary codes have been increasingly employed across the globe to drive corporate governance reform. These guidelines, which emanate from stock exchanges, securities commissions, investors and investor associations, and supra-national organizations, set forth "best practice" recommendations across a range of topics that listed companies, shareholders, and other relevant parties are encouraged but not obliged to follow. Today, corporate governance codes are found in over 70 countries. It is relatively straightforward to develop corporate governance codes. The challenge lies in ensuring their effective implementation and enforcement, as evidenced by the complaints heard in some countries that governance codes have not lived up to their promise to spur enduring improvements in corporate practices. The concerns voiced range from poorly written guidelines to inadequate levels of compliance by companies to "box-ticking" by investors. This opinion piece will begin with an examination of the principal uses and key design characteristics of a corporate governance code.