Lessons Learned from the Corporate Governance ROSC Assessments - PowerPoint PPT Presentation

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Lessons Learned from the Corporate Governance ROSC Assessments

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Olivier Fr mond. Program Manager. Private Sector Advisory Services. The World Bank. April 15, 2003 ... La Porta, Lopez-de-Silanes, Shleifer and Vishni ... – PowerPoint PPT presentation

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Title: Lessons Learned from the Corporate Governance ROSC Assessments


1
  • Lessons Learned from the Corporate Governance
    ROSC Assessments

Olivier Frémond Program Manager Private Sector
Advisory Services The World Bank April 15, 2003
2
Overview
  • The ROSC initiatives
  • Lessons learned

3
The ROSC
  • Collaborative partnership with IMF
  • Voluntary country participation
  • Not a rating
  • Publication http//rru.worldbank.org
  • Right of reply
  • OECD Principles
  • 27 countries assessed

4
Lessons learned
  • Choice
  • Coherence versus convergence
  • Enforcement
  • Deviations from one share/one vote

5
One share/one vote defined
  • La Porta, Lopez-de-Silanes, Shleifer and Vishni
  • Pure symmetry between cash flow rights and voting
    rights
  • Views of the international community

6
Asymmetries between voting and cash flow rights
  • Concentration of control rights
  • Diffusion of control rights

7
Concentration of control rights (1)
  • Non-voting shares
  • Multiple voting shares
  • Shares with preferential rights/golden shares

8
Concentration of control rights (2)
  • Pyramid structures and cross-shareholding
  • Shareholder agreements
  • Proxy voting

9
Diffusion of control rights (1)
  • Voting on a show of hands
  • Capital requirements to initiate corporate
    actions
  • Veto rights/supermajority requirements

10
Diffusion of control rights (2)
  • Cumulative voting
  • Voting caps

11
Trade-offs for minority shareholders
  • Portfolio diversification
  • Liquidity
  • Market for corporate control
  • Management monitoring

12
Policy considerations (1)
  • Do dual class shares dilute welfare?
  • Customizing provisions to fit national agendas
  • Asymmetries work in both directions
  • Politics drives policies, mix of provisions

13
Policy considerations (2)
  • Searching for optimal combinations
  • Provision effectiveness depends on ownership
    structure
  • Deviations from one share/one vote prevent
    development of market for corporate control
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