Business Ethics and Corporate Governance, Second Edition

PROBLEMS FACED BY DEVELOPING AND TRANSITION ECONOMIES

Many developing, emerging and transition economies lack or are just now in the process of developing the most basic market institutions. Hence, corporate governance in these societies involves a much wider range of issues. Economic growth in these countries has turned out to be lower than expected. Privatization does not seem to have brought about the anticipated improvements in corporate efficiency. The state and ‘para-state institutions such as privatization funds remain the largest shareholders of companies. Internal owners dominate in many companies, while the external owners do not have enough voting power to control the companies and thereby to ensure for themselves appropriate returns. ...