Claessens, StijnYurtoglu, Burcin2017-06-052017-06-052012-04-23https://hdl.handle.net/10986/26874What 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.en-USCC BY-NC-ND 3.0 IGOACCOUNTING RULESADVANCED COUNTRIESADVERSE EFFECTSAGENCY RISKASSET MANAGEMENTBANK CREDITBANKRUPTCYBOOK VALUEBORROWERBUSINESS OPPORTUNITIESCAPITAL INFLOWSCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCAPITAL MARKETSCASH FLOWCOLLATERALCOMMERCIAL BANKSCOMPETITION POLICYCONFLICT OF INTERESTSCONSUMER SPENDINGCORPORATE FINANCECORPORATE GOVERNANCECORPORATE GOVERNANCE BEHAVIORCORPORATE GOVERNANCE FRAMEWORKCORPORATE GOVERNANCE REFORMCORPORATE GOVERNANCE REGIMECORPORATE GOVERNANCE STANDARDSCORPORATE OWNERSHIPCORPORATE PERFORMANCECORPORATE SOCIAL RESPONSIBILITYCOST OF CAPITALCOST OF EQUITYCOUNTRY TO COUNTRYCREDIT RISKSCROSS-BORDER FINANCINGCROSS-BORDER ISSUESCROSS-BORDER TRANSACTIONSCURRENCYDEBTDEBT FINANCINGDEPOSITDEVELOPING COUNTRIESDEVELOPMENT FINANCEDIVIDENDSECONOMIC DEVELOPMENTECONOMIC PERFORMANCEECONOMIC POWERSEMERGING MARKETEMERGING MARKET COUNTRIESEMERGING MARKET ECONOMIESEMERGING MARKETSENFORCEMENT OF CONTRACTSENVIRONMENTAL PERFORMANCEEQUITY CAPITALEQUITY INVESTMENTSEXPOSUREEXTERNAL FINANCINGFEDERAL RESERVEFINANCE CORPORATIONFINANCIAL CONGLOMERATESFINANCIAL CRISISFINANCIAL DEREGULATIONFINANCIAL DERIVATIVEFINANCIAL DEVELOPMENTFINANCIAL INNOVATIONFINANCIAL INSTITUTIONFINANCIAL INTEGRATIONFINANCIAL INTERMEDIARIESFINANCIAL MARKETFINANCIAL MARKET DEVELOPMENTFINANCIAL SECTORFINANCIAL SECTOR DEVELOPMENTFINANCIAL SERVICESFINANCIAL STABILITYFINANCIAL STATEMENTSFINANCIAL SYSTEMSFINANCIAL VOLATILITYFIRM PERFORMANCEFIRM VALUATIONFOREIGN INVESTORSFRAUDFUTURE CASH FLOWSGLOBAL ECONOMYGLOBAL FINANCIAL SYSTEMGLOBAL MARKETGLOBALIZATIONGOOD GOVERNANCEGOVERNANCE INDEXGOVERNANCE MECHANISMSGOVERNANCE PRACTICESGROWTH RATEHEDGE FUNDSINCOMEINCOME GROUPINDIVIDUAL FIRMINDIVIDUAL FIRMSINDUSTRIAL COUNTRIESINFORMATION ASYMMETRIESINFORMATION SYSTEMSINITIAL PUBLIC OFFERINGINITIAL PUBLIC OFFERINGSINSTITUTIONAL INVESTORINSTITUTIONAL INVESTORSINSURANCEINTANGIBLEINTANGIBLE ASSETSINTERNATIONAL FINANCEINVESTMENT DECISIONSINVESTOR PROTECTIONJUDICIAL EFFICIENCYJUDICIAL SYSTEMLEGAL DEVELOPMENTLEGAL ENFORCEMENTLEGAL ENVIRONMENTLEGAL FRAMEWORKLEGAL FRAMEWORKSLEGAL PROTECTIONLEGAL SYSTEMLIBERALIZATIONLIQUID MARKETSLIQUIDITYMARKET CAPITALIZATIONMARKET DEVELOPMENTMARKET PENETRATIONMARKET VALUATIONMARKET VOLATILITYMINORITY INVESTORSMINORITY SHAREHOLDERMINORITY SHAREHOLDER RIGHTSMONOPOLYMORAL HAZARDMUTUAL FUNDSNET CAPITALOUTPUTOWNERSHIP STRUCTUREOWNERSHIP STRUCTURESPENSIONPENSION FUNDSPENSIONSPOLITICAL ECONOMYPORTFOLIOPOVERTY ALLEVIATIONPRICE DISCOVERYPRICE MOVEMENTSPRIVATIZATIONPROPERTY RIGHTSPROTECTION OF MINORITY SHAREHOLDERSRATE OF RETURNREGULATORSREGULATORY FRAMEWORKRETIREMENT SAVINGSRETIREMENT SYSTEMSRISK MANAGEMENTRISK OF EXPROPRIATIONSAVINGS ACCOUNTSCANDALSSECURITIESSECURITIES MARKETSSECURITIES REGULATORSHAREHOLDER PROTECTIONSHAREHOLDERSSHAREHOLDERS RIGHTSSOCIAL COSTSSOCIAL ISSUESTOCK EXCHANGESTOCK MARKETSTOCK MARKET CAPITALIZATIONSTOCK PRICESYSTEMIC RISKSTRANSITION COUNTRIESTRANSPARENCYTURNOVERTURNOVER RATIOTURNOVER RATIOSWEAK CORPORATE GOVERNANCEWEAK ENFORCEMENTWORLD DEVELOPMENT INDICATORSWorking PaperInternational Finance Corporation10.1596/26874