Publication: Self-Dealing : Sneaking Corporate Value through the Back Door
Loading...
Published
2006-09
ISSN
Date
2012-08-13
Author(s)
Hickey, Catherine
Editor(s)
Abstract
Self-dealing, prevalent in emerging markets, often harms minority shareholders. The related-party transaction is one common technique, especially in markets with weak law enforcement. Beyond self-dealing, other methods of expropriation, such as insider trading and dilution of share value, can also harm minorities. Countries can use several tactics to combat self-dealing, including improving disclosure, strengthening regulatory enforcement, and increasing public awareness of good governance and investor rights. While not always successful, these measures often go a long way toward protecting minority investors.
Link to Data Set
Citation
“Hickey, Catherine; Nenova, Tatiana. 2006. Self-Dealing : Sneaking Corporate Value through the Back Door. Viewpoint: Public Policy for the Private Sector; Note No. 312. © World Bank. http://hdl.handle.net/10986/11176 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Small Business Tax Regimes(World Bank, Washington, DC, 2016-02)Simplified tax regimes for micro and small enterprises in developing countries are intended to facilitate voluntary tax compliance. However, survey evidence suggests that small business taxation based on simplified bookkeeping or turnover is sometimes perceived as too complex for microenterprises in countries with high illiteracy levels. Very simple fixed tax regimes not requiring any books or records tend to be overly popular but prone to abuse. System reforms will require more precise tailoring of the simplified regimes to their target beneficiaries, coupled with strong compliance management to detect and deter abuse. The overall objective of simplified taxation for micro and small enterprises (MSEs) in developing countries is generally to facilitate voluntary tax compliance and remove obstacles in moving toward business formalization and growth.Publication Investment Climate in Africa(World Bank, Washington, DC, 2015-07-01)The World Bank Group has been working on investment climate reform in Sub-Saharan Africa for nearly a decade, a period characterized by dramatic economic growth on the continent. Establishing links between such reform interventions and economic growth, however, is a complex problem. Although this note finds some connection between investment climate reform and economic growth, establishing more concrete evidence of causation will require greater focus at the country level, as well as on small and medium enterprises. This is where investment climate interventions generate change.Publication Export Competitiveness(World Bank, Washington, DC, 2015-06)This review of the empirical literature shows that industries with more intense domestic competition will export more. Competition law enforcement can be traced to export performance and is complementary to trade reforms. Pro-competition market regulation that reduces restrictions and promotes competition, where it is viable, is an important determinant for trade. The elimination of barriers to entry and rivalry, and a level playing field in upstream sectors contributes to export competitiveness in downstream manufacturing sectors. In some sectors, effective competition policy can directly lower trade costs.Publication Competition and Poverty(World Bank, Washington, DC, 2016-04)A literature review shows competition policy reforms can deliver benefits for the poorest households and improve income distribution. A lack of competition in food markets hurts the poorest households the most. Competition in input markets and between buyers helps farmers and small businesses. And more competitive markets bolster job growth over the longer term. More research is needed, however, to better understand the impact of competition reforms and antitrust enforcement on poverty and shared prosperity.Publication Contract Farming(World Bank, Washington, DC, 2014-10)Contract farming involves production by farmers under agreement with buyers for their outputs. This arrangement can help integrate small-scale farmers into modern agricultural value chains, providing them with inputs, technical assistance, and assured markets. Critics contend that contract partners may subject farmers to abuses. The literature shows that in fact contract farming can raise farm income, but mainly for high-value crops. It also indicates that in many cases firms are willing to work with small farms. This note confirms that conflicts are common between buyers and farmers, and that alternative dispute resolution methods may help resolve them.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Takeover Laws and Financial Development(World Bank, Washington, DC, 2006-10)The issue of "an appropriate" legal framework, especially in the case of the takeover market, has been poorly studied in the case of emerging markets, yet it is of immediate relevance and practical policymaker interest. The study makes a first attempt to analyze takeover regulations in a comparative context across 50 countries. It proposes a methodology to create a detailed index on the most salient features of capital market laws, and illustrates the approach on the case of takeover legislation. The methodology allows better understanding of the impact of laws on markets and development, allows a detailed quantification of a given regulation, in this case takeover market rules, and helps determine relevant policy implications. Specifically, the framework permits the exploration of the effects of individual regulations, their substitutability and interplay, as well as the overall extent of friendliness of the laws to investors, or particular groups thereof (such as minority shareholders), and the links of specialized regulation with the overall legal system. Finally, the study explores the effect of the investor-friendliness of takeover laws on stock market development.Publication Corporate Governance Country Assessment(Washington, DC, 2008-06)This report assesses Bulgaria's corporate governance policy framework for publicly traded companies. It highlights recent improvements to laws and regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Bulgaria. This report updates the 2002 Corporate Governance ROSC (CG ROSC). As Bulgaria continues its dynamic pace of reforms, all key stakeholders involved in the reforms process may wish to focus on the following four reform priorities: first, the Financial Supervision Commission (FSC) should continue to strictly enforce existing laws and may wish to focus on how the following three groups "comply or explain" with the recently issued national code of corporate governance (NCGC): (i) holding companies, in which governance practices are considered insufficient; (ii) the largest ten issuers that make-up most of the trading and market capitalization; and (iii) principal issuers on the unofficial market that are driving much of the market's growth. Second, the task force that launched the NCGC may wish to eventually review the NCGC to offer more practical guidance on how to implement good practice. Third, the government and regulators may wish to make minor amendments to the legal and regulatory framework. Fourth and finally, the most important factor to improve corporate governance will be to train and thus, over time, build a cadre of qualified, experienced, and professional directors who are empowered to ensure that the "law on the books" translates into actual practice.Publication Corporate Governance Country Assessment : Kenya(Washington, DC, 2007-12)Good corporate governance ensures that companies use their resources more efficiently, protects minority shareholders, leads to better decision making, and improves relations with workers, creditors, and other stakeholders. It is an important prerequisite for attracting the patient capital needed for sustained long-term economic growth. This report provides an assessment of Kenya s corporate governance policy framework. It highlights recent improvements in corporate governance regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Kenya.Publication Who's Running the Company?(International Finance Corporation, Washington, DC, 2012-10)The media guide aims at helping business journalists report on corporate governance and raise public awareness of the impact it has on businesses, shareholders, and the broader community of stakeholders. This report will help journalists develop clear and compelling stories that examine how a company is governed. It was produced by IFC's Global Corporate Governance Forum in partnership with the International Center for Journalists, an organization that advances quality journalism worldwide. Topics include the media's role reporting on corporate governance, how a board of directors functions, what financial reports reveal, and how to track down information that sheds light on a company's performance in an informed way.Publication Pakistan : Report on the Observance of Standards and Codes (ROSC) : Corporate Governance Country Assessment(Washington, DC, 2005-06)This report provides an assessment of Pakistan's corporate governance policy framework. In Pakistan, awareness of the importance of good corporate governance is high among policymakers and standard setters. It highlights recent improvements in corporate governance regulation, makes policy recommendations, and provides investors with a benchmark against which to measure corporate governance in Pakistan. The focus of the assessment is on listed companies, although reference is also made to banks and other financial institutions. Reform to improve corporate governance has been significant, including the introduction of a code of corporate governance and increased vigilance by regulators. Highly concentrated control by significant shareholders has limited the objectivity of boards and reduced the impact of some of the recent reforms. More generally, many smaller and family-owned companies have a limited awareness of the potential benefits of improved corporate governance. Corporate governance reform needs to percolate throughout the corporate sector, including family-owned businesses. The report concludes that further steps need to be taken to protect shareholder rights, including disclosure of beneficial ownership, and that boards must become more effective, with stronger fiduciary duties, and more capable independent directors.
Users also downloaded
Showing related downloaded files
Publication Towards a Strategic Analysis of Water Resources Investments in Kenya : Hydrological, Economic, and Institutional Assessment for Storage Development(Washington, DC, 2011-06-30)The objective of this study was to advance the process of prioritizing water storage investments that could reduce water stress in economically important areas. The specific objectives of the study were to (i) outline a comprehensive framework for screening of potential storage sites; (ii) identify important water stressed areas through an updated water balance; (iii) assess alternative multipurpose water storage projects through physical, hydrological and economic criteria; and (iv) analyze institutional and financing aspects of water resources development in Kenya to identify capacity and knowledge inadequacies. The study focused on identifying viable surface water storage projects to increase water supply reliability and mitigate the effects of common multi-year droughts. No new estimates of groundwater resources were made, though they were considered in quantifying overall water availability. The scope of the study was limited to an initial screening of infrastructure options that will increase the reliability of water supply. The state of water service delivery was not assessed as it was outside the scope of this study.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 Reforming China's Rural Health System(World Bank, 2009)This book began in 2003 during the initial formulations of China's 11th five-year plan, which covers the period 2006-10. During the entire period, the rural health Analytic and Advisory Activities (AAA) team analyzed the sector and debated reform options with government officials and scholars. It is helped the government in its extensive reform efforts over the past few years. The publication can serve two important functions: to provide an analytical framework for thinking about what happened in China's rural health system and why, and to present a global perspective on the options for further strengthening the sector. China is well on its way to achieving a modern, equitable, and well-functioning rural health sector, but this is not an easy task for any country. This book can provide a useful reference for policy makers in the next phase of health reform and beyond.Publication Russians about Development Assistance(World Bank, Washington, DC, 2011-06)Public opinion research of the Russian population attitudes towards Official Development Assistance(ODA) was undertaken in 2010 as part of the DFID supported WB Russia as a Donor Initiative (RDI) program assisting Russian Government in its development aid efforts. The research was conducted by Levada-Center, an independent polling and sociological company, using qualitative (in-depth interviews with opinion leaders) and quantitative (nationally representative survey) methodology. Volumes 1 and 2 report respectively on the findings of the qualitative and quantitative surveys. The qualitative survey included 25 opinion leaders interviews (public officials, NGOs, academia, business community, and the media), conducted in the cities of Moscow, St. Petersburg, Krasnoyarsk, and Rostov. The interviews covered economic situation in Russia; Russia's global role; potential recipient countries of Russian ODA and types of assistance; and overall awareness of Russian ODA activities. The opinion leaders share a common feeling that Russia is a "rich country with poor people" that still should take increasingly active role in development aid, being an influential "world power". Opinion leaders believe that Russian ODA should focus on: (i) countries affected by natural disasters; (ii) neighboring former Soviet bloc countries that have traditionally been "a zone of Russia's historic responsibility"; and (iii) countries posing global security threats. "Giving a fishing rod, not fish" was indicated as a preferred approach to development aid. Joint ODA programs with the World Bank and other multilateral organizations were supported as a tool to strengthen Russia's donor role, learn international practices, and reduce corruption risks. Most of the interviewees had little knowledge of the Russian ODA, but they thought it was matching the national interests, and were interested to learn more on ODA. A need to inform the general public about Russia's donor role was highlighted. The nationwide survey included 1503 respondents from 96 cities and 35 rural settlements located in 44 regions of Russia. The sample was nationally representative of the Russian adult population (aged 18 years and older). The survey showed that 3/4 of the population approve Russia's development aid to the poorest countries with preferred areas of Russia support being countries affected by natural disasters (64 percent support) and poor CIS countries (22 percent). Potential assistance could be provided in a form of sending Russian specialists to work in developing countries (58 percent); educating their students in Russia (51 percent); and supplying food and equipment at subsidized prices (30 percent). Medical care, access to basic education, and developing industrial facilities and infrastructure are seen as the areas of most effective assistance. Russia ODA collaboration with multilateral organizations is also seen favourably. Motivation of Russia ODA in the views of the respondents included: (i) shared moral responsibility for reduction of extreme poverty in developing countries; (ii) expansion of the circle of countries friendly to Russia; (iii) reduction the threat of terrorism and drug traffic between Russia and neighboring countries; and (iv) increase of Russia's influence and prestige in the world.Publication Taxes, Spending, and Equity: International Patterns and Lessons for Developing Countries(Washington, DC: World Bank, 2025-11-17)Taxes and public spending underpin the basic administration of government and finance the human capital and infrastructure investments needed for economic growth. They can also have a significant and immediate impact on poverty and inequality. The question of how public finance can support longer-term growth objectives while promoting equity has become even more important in recent years, given the high fiscal deficits and debt levels most countries emerged with in the aftermath of the COVID-19 pandemic. These included the increasing cost of debt and the need to restart environmentally sustainable growth while helping households address the learning losses and other social scars caused by the pandemic. This paper examines the global evidence on which households pay which taxes and who benefits from what spending, and critically, the net effect on different households across the income distribution. The aim is to identify the patterns and lessons that emerge for designing progressive fiscal policies. A global dataset of 96 countries is assembled, spanning all regions of the world and all national income levels, grounded in the Commitment to Equity (CEQ) approach to fiscal incidence.