Who Controls East Asian Corporations—and the Implications for Legal Reform

This Note reports an analysis of ultimate control in nearly 3,000 publicly traded companies in December 1996-before the financial crisis-in nine East Asian economies: Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Si...

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Main Authors:	Claessens, Stijn, Djankov, Simeon, Lang, Larry H. P.
Format:	Viewpoint
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	CAPITAL MARKETS COMPANY CONGLOMERATES CORPORATE CONTROL CORPORATE GOVERNANCE CORPORATE OWNERSHIP CORPORATION CORPORATIONS CORRUPTION DEGREE OF CORRUPTION DISCLOSURE DIVERSIFICATION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS GOVERNMENT OFFICIALS GOVERNMENT POLICY INSTITUTIONAL DEVELOPMENT INSURANCE LAWS LEASING LEGAL INSTITUTIONS LEGAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LISTED COMPANIES MARKET ENTRY POLITICAL PARTIES PREFERENTIAL TREATMENT REGULATORY REFORM RULE OF LAW SHAREHOLDERS VOTING LEGAL REFORMS OWNERSHIP INSURANCE COMPANIES ECONOMIC DEVELOPMENT INVESTMENTS
Online Access:	http://documents.worldbank.org/curated/en/1999/09/2531902/controls-east-asian-corporations-implications-legal-reform http://hdl.handle.net/10986/11465

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spelling	okr-10986-114652021-04-23T14:02:55Z Who Controls East Asian Corporations—and the Implications for Legal Reform Claessens, Stijn Djankov, Simeon Lang, Larry H. P. CAPITAL MARKETS COMPANY CONGLOMERATES CORPORATE CONTROL CORPORATE GOVERNANCE CORPORATE OWNERSHIP CORPORATION CORPORATIONS CORRUPTION DEGREE OF CORRUPTION DISCLOSURE DIVERSIFICATION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS GOVERNMENT OFFICIALS GOVERNMENT POLICY INSTITUTIONAL DEVELOPMENT INSURANCE LAWS LEASING LEGAL INSTITUTIONS LEGAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LISTED COMPANIES MARKET ENTRY POLITICAL PARTIES PREFERENTIAL TREATMENT REGULATORY REFORM RULE OF LAW SHAREHOLDERS VOTING LEGAL REFORMS OWNERSHIP CORPORATE GOVERNANCE CONGLOMERATES INSURANCE COMPANIES ECONOMIC DEVELOPMENT INVESTMENTS This Note reports an analysis of ultimate control in nearly 3,000 publicly traded companies in December 1996-before the financial crisis-in nine East Asian economies: Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Taiwan (China), and Thailand. The analysis shows that the ten largest families in Indonesia, the Philippines, and Thailand control half the corporate sector (in terms of market capitalization), while the ten largest in Hong Kong and Korea control about a third (figure 1). More extreme, in Indonesia and the Philippines ultimate control of about 17 percent of market capitalization can be traced to a single family. While the analysis shows that ownership concentration in these countries is in keeping with levels in other developing and some industrial countries, its findings shed light on the viability and vulnerability of corporate governance structures in East Asia. The concentration of corporate wealth and the tight links between corporations and government may have impeded legal and regulatory development, directly or indirectly. To create incentives for better governance, East Asian governments may have to promote more competition, even by breaking up conglomerates, and curtail related party lending by restricting ownership of banks. 2012-08-13T15:08:42Z 2012-08-13T15:08:42Z 1999-09 http://documents.worldbank.org/curated/en/1999/09/2531902/controls-east-asian-corporations-implications-legal-reform Viewpoint. -- Note no. 195 (September 1999) http://hdl.handle.net/10986/11465 English Viewpoint CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Viewpoint Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	CAPITAL MARKETS COMPANY CONGLOMERATES CORPORATE CONTROL CORPORATE GOVERNANCE CORPORATE OWNERSHIP CORPORATION CORPORATIONS CORRUPTION DEGREE OF CORRUPTION DISCLOSURE DIVERSIFICATION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS GOVERNMENT OFFICIALS GOVERNMENT POLICY INSTITUTIONAL DEVELOPMENT INSURANCE LAWS LEASING LEGAL INSTITUTIONS LEGAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LISTED COMPANIES MARKET ENTRY POLITICAL PARTIES PREFERENTIAL TREATMENT REGULATORY REFORM RULE OF LAW SHAREHOLDERS VOTING LEGAL REFORMS OWNERSHIP CORPORATE GOVERNANCE CONGLOMERATES INSURANCE COMPANIES ECONOMIC DEVELOPMENT INVESTMENTS
spellingShingle	CAPITAL MARKETS COMPANY CONGLOMERATES CORPORATE CONTROL CORPORATE GOVERNANCE CORPORATE OWNERSHIP CORPORATION CORPORATIONS CORRUPTION DEGREE OF CORRUPTION DISCLOSURE DIVERSIFICATION FINANCIAL CRISIS FINANCIAL SECTOR FIRMS GOVERNMENT OFFICIALS GOVERNMENT POLICY INSTITUTIONAL DEVELOPMENT INSURANCE LAWS LEASING LEGAL INSTITUTIONS LEGAL REFORM LEGAL SYSTEM LEGAL SYSTEMS LISTED COMPANIES MARKET ENTRY POLITICAL PARTIES PREFERENTIAL TREATMENT REGULATORY REFORM RULE OF LAW SHAREHOLDERS VOTING LEGAL REFORMS OWNERSHIP CORPORATE GOVERNANCE CONGLOMERATES INSURANCE COMPANIES ECONOMIC DEVELOPMENT INVESTMENTS Claessens, Stijn Djankov, Simeon Lang, Larry H. P. Who Controls East Asian Corporations—and the Implications for Legal Reform
relation	Viewpoint
description	This Note reports an analysis of ultimate control in nearly 3,000 publicly traded companies in December 1996-before the financial crisis-in nine East Asian economies: Hong Kong, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, Taiwan (China), and Thailand. The analysis shows that the ten largest families in Indonesia, the Philippines, and Thailand control half the corporate sector (in terms of market capitalization), while the ten largest in Hong Kong and Korea control about a third (figure 1). More extreme, in Indonesia and the Philippines ultimate control of about 17 percent of market capitalization can be traced to a single family. While the analysis shows that ownership concentration in these countries is in keeping with levels in other developing and some industrial countries, its findings shed light on the viability and vulnerability of corporate governance structures in East Asia. The concentration of corporate wealth and the tight links between corporations and government may have impeded legal and regulatory development, directly or indirectly. To create incentives for better governance, East Asian governments may have to promote more competition, even by breaking up conglomerates, and curtail related party lending by restricting ownership of banks.
format	Publications & Research :: Viewpoint
author	Claessens, Stijn Djankov, Simeon Lang, Larry H. P.
author_facet	Claessens, Stijn Djankov, Simeon Lang, Larry H. P.
author_sort	Claessens, Stijn
title	Who Controls East Asian Corporations—and the Implications for Legal Reform
title_short	Who Controls East Asian Corporations—and the Implications for Legal Reform
title_full	Who Controls East Asian Corporations—and the Implications for Legal Reform
title_fullStr	Who Controls East Asian Corporations—and the Implications for Legal Reform
title_full_unstemmed	Who Controls East Asian Corporations—and the Implications for Legal Reform
title_sort	who controls east asian corporations—and the implications for legal reform
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/1999/09/2531902/controls-east-asian-corporations-implications-legal-reform http://hdl.handle.net/10986/11465
_version_	1764416833855684608

Who Controls East Asian Corporations—and the Implications for Legal Reform

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