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Governance and Performance in Emerging Markets : Empirical Study on the Link Between Performance and Corporate Governance of IFC Investment Clients (Inglês)

Investors, including International Finance Corporation (IFC) and other development finance institutions, increasingly look at governance as an indicator of firm quality and a factor in investment selection. There is a strong business case for linking sound corporate governance (CG) practices to better firm performance. This proposition is based on the view that companies adopting governance best practices make better business decisions over time, better manage their risks, enjoy enhanced market reputation, and have improved access to capital. From a macro perspective, CG may also contribute to country-level social and economic development. This study explores the empirical link between CG and performance with data from IFC’s investment portfolio, using a research methodology in line with other studies in the field but adapted to IFC’s investment environment. The study sample comprised companies that IFC invested in during FY11 and FY12 (July 1, 2010, through June 30, 2012). First, the study adds to a body of academic research by including unlisted companies from emerging markets. Second, IFC can further leverage its strong relationships with other development finance institutions by encouraging them to conduct similar studies.


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    Karapetyan,Davit, Wasti,Nazeem A., Volynets,Alexey K., Di Miceli Da Silveira,Alexandre

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    Governance and Performance in Emerging Markets : Empirical Study on the Link Between Performance and Corporate Governance of IFC Investment Clients

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    OECD Principles of Corporate Governance; Environmental and Social Action Plan; Economic Return on Investment Capital; Environmental and Social Risk Rating; state-owned enterprise; Return on Invested Capital; Environmental and Social Performance; social and economic development; Internal rate of return; price to earnings ratio; Manufacturing, Agribusiness & Services; write code of ethic; corporate governance practice; good corporate governance; Credit Risk Rating; cost of capital; cost of equity; net operating profit; method of moments; emerging market investment; return on asset; investment in security; Corporate Governance Risk; development finance institution; Investment securities; emerging market portfolio; changes in regulation; good governance practices; stock price reaction; access to capital; governance best practice; Special Purpose Vehicle; benefit to society; Investment Risk Platform; Equity Risk Rating; social risk management; internal audit function; short time span; country of origin; time and resource; Type of Investment; good performance; firm performance; investment period; empirical study; Financial Sector; performance variable; study period; financial indicator; sample bias; financial distress; recent years; investment operation; client company; significant correlation; financial return; distressed asset; study limitations; investment client; multiple regression; investment product; Investment Products; selection bias; investment professional; instrumental variable; econometric procedure; quantitative data; weighted average; research methodology; governance performance; financial rate; average equity; recovery program; firm size; positive relationship; regional breakdown; business case; invest capital; debt service; small sample; financial statement; empirical analysis; endogeneity issue; collected data; performance data; firm level; investment relationship; loan factor; deal origination; research study; empirical research; financial benefit; financial industry; portfolio work; causal relationship; new investment; applicable law; high correlation; bottom quartile; academic study; interest cap; holding period; value creation; internal control; credit quality; natural environment; political risk; independent audit; financial practice; written permission; qualitative data; good monitoring; statistical method; portfolio supervision; market power; measurement error; governance improvement; fixed effect; real impact; academic world; low risk; investor protection; debt default; financial value; premium price; risk assessment; company development; Learning and Innovation Credit; Advisory services; improving governance; value addition; econometric analysis; academic research; investment fund; book value; other development; business decision; last point; stakeholder concern; investment portfolio; research quality; investment environment; index value; core operation; performance analysis; value added; social aspect; external expert; governance dimension; research problem; value ratio; scientific method; rigorous procedure; internal system; total sample; ownership structure; supply chain; external stakeholder; sustainability policy; positive correlation; response rate; debt operation; safety standard; private debt; industry group; exit mechanism; finance provider; future earnings; lending institution; financial crisis; stock exchange; regional concentration; industry concentration; correlation analysis; research assistance; in economics; short term consultant; project costing; strategy development; debt investment; real value; qualitative aspect; profit margin; equity holding; conceptual model; foreign exchange; equity value; loan asset; market situation; outcome data; credit index; high performance; investment transaction; sector structure; security arrangement; regulatory environment; financial risk; traditional credit; average score



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