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Corporate Governance

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Corporate Governance Corporate Governance in State-Owned Enterprises: Specific Problems & Possible Solutions by Nicole Beha, Marius Linkohr, Kristof M ller – PowerPoint PPT presentation

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Title: Corporate Governance


1
Corporate Governance
  • Corporate Governance in State-Owned Enterprises
    Specific Problems Possible Solutions
  • by Nicole Beha, Marius Linkohr, Kristof Müller

2
Contents
  • Definition
  • SOEs
  • Specific problems
  • Solution strategies
  • Recommendations Conclusion

3
Definition
  • The term State-Owned Enterprise (SOE) refers
    to enterprises where the state has significant
    control, through full, majority or significant
    minority ownership.
  • (OECD 2005)

4
State-Owned Enterprises
  • natural monopolies (e.g. railroads, postal
    services, prison facilities)
  • public goods (e.g. health, education)
  • BUT - poor performances
  • - inefficiences
  • ? Corporate Governance structures

5
Specific Problems of SOEs
  • agency problem
  • bureaucrats as managers
  • double principal-agent problem
  • non-business interests
  • ressource transfers

6
Specific Problems of SOEs
  • absence of market mechanisms
  • no threat of takeover or bankruptcy
  • monopolies
  • capital / investment raising situation
  • special role government as regulator and owner
  • performance measurement

7
Solution Strategies
  • Corporatization
  • adoption of private-sector structures, such as
    single legal entity for the firm and/or
    independent managers
  • first step towards privatization
  • ? not all private structures can be used

8
Solution Strategies
  • incentives framework
  • performance contracts
  • ? how is performance measured?
  • monitoring and control / Board of Directors
  • ? shareholders interests absence of market
    mechanisms

9
Recommendations Conclusion
  • setting clear objectives ranking them by
    priority
  • insulating SOEs from political bureaucratic
    influence
  • independence of the Board of Directors
  • transparency of the SOE

10
Questions or Comments?
  • Thank you for your attention!
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