Transcript Sue Rutledge

Challenges and
Opportunities in
Convergence of
Corporate
Governance Practices
Sue Rutledge
Regional Corporate Governance Coordinator
Europe and Central Asia Region
World Bank Group
Market Capitalization
Croatia
Bulgaria
Czech Republic
Hungary
Poland
Romania
Slovak Republic
Slovenia
Market Cap Market Cap
(% of GDP) (US$ billions)
49.8
29.0
19.1
10.3
30.8
48.6
29.8
41.9
31.0
149.1
20.9
32.8
9.5
5.6
23.0
15.2
Turnover
Ratio (%)
0.6
4.2
5.1
6.8
3.7
1.1
0.3
0.8
Market Cap – Ranked by GDP %
Market Capitalization of Listed Com panies (% of
GDP)
49.8
19.1
9.5
20.9
23
29.8
30.8
11.2
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60
50
40
30
20
10
0
Correlation Market Cap vs. CG
Market Capitalization versus Corporate Governance
35
Turkey 2005
Poland 2005
Market Capitalization as
Percentage of GDP
30
Slovenia 2004
25
Czech Rep. 2002
20
Hungary 2003
Romania 2004
Croatia 2002
15
Macedonia 2005
10
Lithuania 2002
Latvia 2002
Slovakia 2003
5
Bulgaria 2002
Georgia 2002
Armenia 2005
0
0
20
40
60
80
Observance of OECD Corporate Governance Principles
Source: Corporate Governance Reports on the Observance of Standards & Codes (ROSCs) and World Development Indicators.
100
Global Growth in Derivatives
Capital Market Infrastructure
Source: Thomas Murray
CG ROSC Recommendations
• Implement EU Directive on Disclosure of
Ownership and Control of Companies.
• Improve disclosure of related party transactions
• Require traded companies to publish full
financial statements.
• Require all companies to file financial
statements with court registry.
CG ROSC Recommendations
• Introduce duty of loyalty for board members.
• Hold board members liable for failure to disclose
potential conflicts of interest.
• Require codes of ethics for listed companies.
• Increase independence for board members.
• Increase board training.
• Require audit committees for listed companies.
• Improve oversight of state owned enterprises.
CG ROSC Recommendations
• Donors should support program to strengthen
HANFA:
– “Twinning” with supervisory agencies from EU
member states.
– Expand recruiting from private sector.
• HANFA should improve dialog with market
– Increase dialog and consultation with the
financial industry and listed companies.
– Make greater effort to explain its rulings.
THANK YOU!!!
Sue Rutledge
Regional Corporate Governance Coordinator
Europe and Central Asia Region
World Bank Group