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Washington, D.C., March 15, 2012
—Good corporate governance contributes to economic development in developing countries by helping private businesses improve their performance, gain greater access to finance, and lower their capital costs, according to a new report from IFC, a member of the World Bank Group.
“Focus 10: Corporate Governance and Development,” finds that improvements in corporate governance boost investment and help increase economic and productivity growth. Well-governed companies, moreover, tend to have less volatile stock prices in times of crisis. In addition, the report finds that stronger shareholder protections are correlated with the development of more sophisticated capital markets, which leads to greater access to financial services for small and medium enterprises and poorer people.
“The recent financial crisis has been a particularly severe wake-up call,” says the report, produced by the Global Corporate Governance Forum, which is hosted by IFC. “Weaknesses in corporate governance structures within companies and banks were cited as reasons for excessive risk taking, skewed incentive compensation for senior managers, and the predominance of a board culture that values short-term gains over sustained, long-term performance.”
The report was authored by Stijn Claessens, a professor of international finance policy at the University of Amsterdam, and Burcin Yurtoglu, a professor of corporate finance at the WHU-Otto Beisheim School of Management in Germany. The publication is part of the Global Corporate Governance Forum’s effort to promote better corporate governance policies by supporting a network of leading academics under the auspices of its Emerging Markets Corporate Governance Research Network, chaired by Professor Claessens.
For more than a decade, IFC has promoted good corporate governance at the company level—by assisting its investment and advisory clients—and at the country level, through projects supporting a better investment climate, and by promoting good practice standards and guidelines.
For more information about the Global Corporate Governance Forum, visit
. To download the report, visit
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, we helped our clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly $19 billion. For more information, visit
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