Governance and Performance in Emerging Markets

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In 2016, IFC’s Corporate Governance Group launched an empirical study to explore the link between the quality of IFC portfolio clients’ corporate governance and their financial and economic performance over a four-to-five-year period. Using client surveys and portfolio financial, economic, and development outcome data, IFC tested the hypothesis that better corporate governance is associated with better performance over a defined period.

The analysis of collected data showed that investing in companies with better corporate governance at the time of disbursement of IFC’s investment is associated with a better average credit risk rating by almost 1.50 points throughout the IFC investment period.