Investor Protection and Corporate Governance : Firm-Level Evidence Across Latin America
This book holds that the crucial failure of corporate governance is the expropriation of outside investors, be they shareholders or creditors, by those who are in control of firms. The problem of expropriation, also known as tunneling, often takes...
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| Language: | English en_US |
| Published: |
Palo Alto, CA: Stanford University Press
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/01/8094370/investor-protection-corporate-governance-firm-level-evidence-across-latin-america http://hdl.handle.net/10986/6769 |
| Summary: | This book holds that the crucial failure
of corporate governance is the expropriation of outside
investors, be they shareholders or creditors, by those who
are in control of firms. The problem of expropriation, also
known as tunneling, often takes on enormous proportions.
Billions of dollars of wealth are siphoned away from outside
investors to controlling shareholders and their private
company allies. The expropriation prevents investors from
devoting funds in the corporate sector, thus leading to low
valuations of corporate assets, stunted capital markets, and
slowed economic growth. Low valuations and underdeveloped
financial markets are only two of the symptoms of investor
expropriation. Other symptoms include concentrated corporate
ownership, large spreads between cash flow ownership and the
voting rights of dominant shareholders, pyramids, and low
dividend payments. When financial markets exhibit these
symptoms, the likely underlying problem is investor
expropriation. The essays collected in this volume put
together a compelling picture showing that many of the
symptoms of investor expropriation and poor corporate
governance are present in Latin America. The evidence is
loud and clear in every chapter of this book. But there are
also benefits to collecting this detailed proof. The
evidence suggests recipes for improvement as well. The
message of this book is as unambiguous as is its analysis: a
critical goal in the agenda of financial reform in Latin
America must be improvement in corporate governance through
legal reform. |
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