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The Effectiveness of Boards of Directors of State Owned Enterprises in Developing Countries / Vagliasindi, Maria
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Vagliasindi, Maria
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Board member.
- Boards of Directors.
- Corporate governance.
- Corporate Law.
- Debt Markets.
- Emerging Markets.
- Finance and Financial Sector Development.
- Financial performance.
- Firm performance.
- Governance.
- Governance arrangements.
- Independent directors.
- Law and Development.
- Little attention.
- Microfinance.
- National Governance.
- Private enterprises.
- Private Partnerships.
- Private Sector Development.
- Local Subjects:
- Board member.
- Boards of Directors.
- Corporate governance.
- Corporate Law.
- Debt Markets.
- Emerging Markets.
- Finance and Financial Sector Development.
- Financial performance.
- Firm performance.
- Governance.
- Governance arrangements.
- Independent directors.
- Law and Development.
- Little attention.
- Microfinance.
- National Governance.
- Private enterprises.
- Private Partnerships.
- Private Sector Development.
- Physical Description:
- 1 online resource (32 pages)
- Place of Publication:
- Washington, D.C., The World Bank, 2008
- System Details:
- data file
- Summary:
- This paper aims to shed some new light on the conditions needed to ensure the effectiveness of Boards of Directors of state owned enterprises with a focus on infrastructure sectors. In the case of developing countries, empirical studies have found evidence of positive links between the composition of the Board of Directors and financial performance. Yet the lack of solid theoretical foundations, and in some cases poor data availability, makes the conclusions of most studies weak. Several policy recommendations emerge from the review of the economic literature and evidence from case studies. First, the introduction of a sufficient number of independent directors emerges as an important corporate governance milestone. Empowering them to exercise effective monitoring of management, however, may prove to be a formidable challenge for of state owned enterprises. More attention to board procedures, particularly related to the Board selection and evaluation process, is essential, to produce the necessary insulation of Boards from government interference. Ensuring sufficient continuity of services to directors is particularly crucial to improve corporate governance. In addition, other factors that may reduce directors' ability to monitor corporate activities, such as the age profile and the number of Boards on which they sit, need to be handled more carefully.
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