Defining Corporate Governance
Corporate governance refers to the structures and processes for the direction and control of companies. Corporate governance concerns the relationships among the management, the Board of Directors, the controlling shareholders, minority shareholders and other stakeholders. Good corporate governance contributes to sustainable economic development by enhancing the performance of companies and increasing their access to outside capital.
Corporate Governance activities at the World Bank
The corporate governance activities of the World Bank focus on standardized assessments (Reports on the Observance of Standards and Codes) of the corporate governance regulations and practice in client countries, identification of best practice, advocacy and capacity-building, and follow-up implementation efforts.
Standardized assessments
The World Bank assists its client countries in the assessment of their corporate governance institutional frameworks and practices by preparing country corporate governance assessments using the Organization for Economic Co-operation and Development's (OECD) Principles of Corporate Governance as a benchmark. These assessments have been carried out under the auspices of the joint World Bank-International Monetary Fund initiatives on the Reports on the Observance of Standards and Codes and the Financial Sector Assessment Program (FSAP). The corporate governance assessments underpin policy reform dialogue between governments and the World Bank and the International Monetary Fund.
Best practice
Identification of successful corporate governance practices, enforcement mechanisms, and effective reforms contribute to a process of continuous learning and improvement. The Corporate Governance Policy Unit manages the knowledge drawn from Reports on the Observance of Standards and Codes assessments, recent relevant literature, as well as corporate governance work by other organizations, which is reflected in case studies of best practice. A recent ongoing inquiry concerns "The Corporate Governance Reform Agenda in Low-Income Countries". The Reports on the Observance of Standards and Codes process has further resulted in the accumulation of country-specific data which holds considerable value for future analyses. Workshops and seminars organized by the Policy Unit bring together corporate governance experts from a variety of research and policy institutions from client countries. An upcoming event planned for the last quarter of 2004 focuses on corporate governance mechanisms viable in low-income countries.
Technical assistance and policy follow-up
In addition to evaluation and policy recommendations, the Corporate Governance Policy Practice has assisted directly with follow-up operations and technical assistance in a number of countries. Some recent examples include the corporate governance component of the programmatic loan to Brazil, the establishment of the Egypt Institute of Directors, and the creation of the Mauritius Corporate Gove
rnance Code.
