Last month, more than 30 development financing institutions signed a statement putting corporate governance at the forefront of their global development efforts. The statement describes some of the benefits good corporate governance provides, including improved company performance, better access to capital, better stakeholder relations, stronger capital markets, as well as lower investment and reputational risk.
But corporate governance contributes to development in so many more ways - ways that become more evident once we extend the analysis of the concept beyond its traditional application - large firms and capital markets. We have seen good corporate governance contribute to development by:
- Cleaning up the nature of relationships between business and state (private-public transparency)
- Helping improve legal enforcement mechanisms (by protecting minority shareholders rights, for example)
- Facilitating property rights protection
- Helping combat corruption (an important but rarely recognized corporate governance benefit)
- Helping firms attract investment (thus creating jobs)
- Developing a strong SME sector and opening up family firms
- Instilling the concepts of transparency and accountability far beyond the corporate sector
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