Corporate Governance of Non-Listed Companies in Emerging Markets

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30 Jan 2006
9789264035744 (PDF) ;9789264035737(print)

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This publication provides policy makers, board members, managers, equity providers, creditors and other stakeholders an overview of the issues to be addressed in establishing good corporate governance of non-listed companies. 

While the corporate governance debate has mostly focused on listed companies with dispersed shareholdings, issues such as financial transparency, the role of access to outside capital and conflict resolution are just as important for non-listed and family controlled companies which play a major role in many economies. 

Contributors to this publication are policy makers, regulators and practitioners, mostly from emerging markets and developing countries including Brazil, China, India, Lebanon and Mexico. Drawing on their varied experiences, the contributors address key corporate governance issues such as the role of professional managers, the implications of specific control and ownership structures; the unique characteristics of corporate governance of non-listed companies, the adequate transparency requirements in non-listed companies, and how policy makers should inform themselves in order to facilitate better corporate governance and business performance in non-listed companies. 

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  • Financial Disclosure
    This paper considers, from a first principles perspective, whether large private corporations should be required by the government to disclose publicly their financial accounts.1 In undertaking this assessment we adopt a conventional national economic welfare perspective. In particular, we assess whether the benefits to the economy as a whole of proposals for mandatory financial disclosure by large private corporations are likely to exceed the economic costs.
  • Ownership and Financing Structures

    In this chapter, we use a large firm-level dataset covering 19 European countries in order to compare the ownership and financing structures, and performance of listed (LCs) and large non-listed companies (NLCs). For the overall sample, we find that the vast majority of NLCs have either a large or medium blockholder. This contrasts the ownership structure of LCs, which usually have no blockholder with an over 50% stake. Moreover, we present information on typology of ultimate blockholders, as well as financial ratios in LCs and NLCs.

  • National Variation in Financing Patterns
    Throughout this chapter, we focus on firms that are not listed on stock exchanges; our special emphasis is on large firms that may exhibit information asymmetries and agency costs because such companies are most likely to experience corporate governance problems (i.e. expropriation of value at the expense of minority shareholders). More specifically, by "large firms" we mean those that are relatively similar in size to listed firms in the same country. Thus, we focus on widely held, non-listed companies that may be of interest to policy-makers and regulators.
  • The Role of the Law in Developing Efficient Corporate Governance Frameworks
    The purpose of this chapter is to address the main corporate governance issues for non-listed companies. It will analyse the economic and legal problems of these companies, and examine the diverse theoretical arguments for and against the importance of a corporate governance framework for non-listed companies, thereby placing corporate governance analysis on a new footing. The paper will review current corporate governance discussions and reforms in emerging and transition markets. In these markets, the corporate governance discussion took off in the wake of the financial crises in Asia, Russia and Brazil in the mid-1990s.
  • Brazil
    This chapter describes the characteristics of Brazilian non-listed companies and the efforts of the Brazilian Institute of Corporate Governance (IBGC) to build awareness and stimulate the use of good corporate governance practices through effective use of research, communications and training activities designed especially for NLCs.
  • Bulgaria
    Large non-listed companies in Bulgaria differ substantially in their corporate governance systems. This heterogeneity is a natural result of the origin and evolution of Bulgarian firms as market agents. Under normal market circumstances companies begin their lives as private companies and become publicly traded when they need additional capital or when they want to create a liquid market for trading in their ownership rights. The impetus for becoming a publicly traded company comes from the company itself and there are different costs to that.
  • China
    Depending on type of ownership, non-listed companies in China can be classified into four forms: state-owned and state holding enterprises, collective enterprises, privately run enterprises and stock enterprises. This classification is due to the ongoing reform process in China, which has gone from a planned economy to a market economy, and from the total domination of state-owned enterprises (formerly named state-run enterprises), to the inception, formation and development of a non-state-run economy (collective enterprises and privately run enterprises), and then to an even match between stateowned and non-state-owned enterprises. The ups and downs of these two kinds of enterprises have led to big differences in the nature of corporate governance in China.
  • Colombia Corporate Governance as an Instrument of Competitiveness
    The objective of this paper is to highlight some reflections and lessons learned from the work that has been done to promote corporate governance as a tool of competitiveness in an emergent economy like Colombia. A practical, empirical and managerial approach was used in this eminent effort.
  • Eurasia
    Eurasia, a region stretching from Ukraine in the West to Mongolia in the East, whilst not a coherent region in any economic sense, is characterised by under-developed capital markets, a dominant state sector, poor legal regulation and protection for stakeholders, a handful of very large companies with monopolistic positions, situations where the national standards regulator often doubles as a service provider, adventurous investors, and rampant corruption.
  • India

    The Indian corporate sector has seen substantial and significant changes in the last ten years of liberalisation and globalisation. Global forces triggered reshaping of the Indian business sector with strong competitive pressures. The initiation of economic reforms ended decades of relative isolation, eroding both the lethargy and the traditional source of dominance of a large and powerful class of family businesses. India has grappled with the challenges posed, and capitalised on the opportunities offered by the new economic environment.

  • Kyrgyz Republic
    Questions of corporate governance are urgent for large companies (corporations), where the owners cannot participate in company management directly. In the Kyrgyz Republic, joint stock companies are such companies.
  • Lebanon
    There is no doubt that corporate governance involves both the private and the public sectors.
    The public sector should provide the necessary infrastructure and ensure that there is a conducive business environment and a healthy investment climate for private enterprise to grow and prosper.
    Since there is a huge gap between the private and the public sector in our country, we have decided, as a start, to focus on our companies’ internal functioning and then focus on the relationship between private entities aiming to apply corporate governance principles and practices.
  • Macedonia
    This analysis provides an overview of recent corporate governance developments affecting nonlisted joint stock companies in Macedonia. The report summarises the findings of corporate governance surveys, reviews the latest legal developments in commercial legislation affecting corporate governance standards, and describes the steps that have been taken by the Macedonian government, the donor community, and the private sector to improve corporate governance standards of Macedonian non-listed joint stock companies.
  • Mexico

    This paper presents an overview of corporate governance practices in non-listed large (the first 100) companies in Mexico. We have divided these companies, based on their majority stock ownership, into two categories: companies owned by Mexican nationals and foreign owned companies.

  • Morocco
    A country’s corporate governance framework includes institutions, rules and mechanisms set up to govern relationships between those who manage companies (insiders) and those who invest in those companies.
  • Venezuela
    Since our creation in 1957, almost 50 years ago, the Asociación Venezolana de Ejecutivos (AVE, Venezuelan Association of Executives ( has strived to be the national reference for best corporate and managerial practices, based on models specifically designed and adapted to our local realities.
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