Protecting Minority Shareholders in Closely Held Firms
In all but a few advanced countries most publicly listed corporations are closely held, with the main shareholder typically playing an active role in management. In emerging markets firms with active owner-managers provide effective business soluti...
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| Format: | Viewpoint |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1999/07/2531240/protecting-minority-shareholders-closely-held-firms http://hdl.handle.net/10986/11471 |
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okr-10986-114712021-04-23T14:02:55Z Protecting Minority Shareholders in Closely Held Firms Leechor, Chad ANTIMONOPOLY LAWS ASSET EXPROPRIATION BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENVIRONMENT CONTRACT ENFORCEMENT CONTROL SHARE CORPORATE CONTROL CORPORATE DIRECTORS CORPORATE GOVERNANCE CORPORATE MANAGEMENT CORPORATE OWNERSHIP CORPORATE RESTRUCTURING CORPORATIONS DEBT DISCLOSURE DISCLOSURE REQUIREMENTS EXPANSION FINANCIAL SECTOR FIRMS FOREIGN OWNERSHIP FOREIGN SECURITIES INSIDER ABUSE LARGE SHAREHOLDERS MARKET ENTRY MERGERS PROTECTIONISM SHAREHOLDERS SHAREHOLDINGS TAKEOVER TRANSPARENCY VALUATION WEALTH SHAREHOLDING STRUCTURE BUSINESS SUPPORT SERVICES CORPORATE GOVERNANCE SHAREHOLDERS EXPROPRIATION MARKET LIBERALIZATION ETHICAL VALUES In all but a few advanced countries most publicly listed corporations are closely held, with the main shareholder typically playing an active role in management. In emerging markets firms with active owner-managers provide effective business solutions where business environments are characterized by corruption and weak contract enforcement. But they also pose a significant risk of asset expropriation for minority shareholders. To promote investor confidence and develop successful securities markets, this risk must be mitigated. Some policy analysts argue that the way to do this is to restrict ownership concentration. Such a step could cause serious harm. This Note argues instead for mitigating risk by strengthening corporate laws to safeguard minority shareholdings, ensuring that markets for corporate control work, and enforcing disclosure requirements for firms and ethical standards for public officials. Modern publicly traded corporations are commonly perceived to have widely dispersed ownership and a separation of ownership and control, with the control delegated to professional managers. The owners of the firm rely on the board of directors to supervise the managers, voting only on major strategic decisions. The key issue of corporate governance in this situation is to ensure that managers act in the best interest of the shareholders. The board therefore plays a pivotal role. 2012-08-13T15:09:41Z 2012-08-13T15:09:41Z 1999-07 http://documents.worldbank.org/curated/en/1999/07/2531240/protecting-minority-shareholders-closely-held-firms Viewpoint. -- Note no. 190 (July 1999) http://hdl.handle.net/10986/11471 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 |
ANTIMONOPOLY LAWS ASSET EXPROPRIATION BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENVIRONMENT CONTRACT ENFORCEMENT CONTROL SHARE CORPORATE CONTROL CORPORATE DIRECTORS CORPORATE GOVERNANCE CORPORATE MANAGEMENT CORPORATE OWNERSHIP CORPORATE RESTRUCTURING CORPORATIONS DEBT DISCLOSURE DISCLOSURE REQUIREMENTS EXPANSION FINANCIAL SECTOR FIRMS FOREIGN OWNERSHIP FOREIGN SECURITIES INSIDER ABUSE LARGE SHAREHOLDERS MARKET ENTRY MERGERS PROTECTIONISM SHAREHOLDERS SHAREHOLDINGS TAKEOVER TRANSPARENCY VALUATION WEALTH SHAREHOLDING STRUCTURE BUSINESS SUPPORT SERVICES CORPORATE GOVERNANCE SHAREHOLDERS EXPROPRIATION MARKET LIBERALIZATION ETHICAL VALUES |
| spellingShingle |
ANTIMONOPOLY LAWS ASSET EXPROPRIATION BANKRUPTCY BARRIERS TO ENTRY BUSINESS ENVIRONMENT CONTRACT ENFORCEMENT CONTROL SHARE CORPORATE CONTROL CORPORATE DIRECTORS CORPORATE GOVERNANCE CORPORATE MANAGEMENT CORPORATE OWNERSHIP CORPORATE RESTRUCTURING CORPORATIONS DEBT DISCLOSURE DISCLOSURE REQUIREMENTS EXPANSION FINANCIAL SECTOR FIRMS FOREIGN OWNERSHIP FOREIGN SECURITIES INSIDER ABUSE LARGE SHAREHOLDERS MARKET ENTRY MERGERS PROTECTIONISM SHAREHOLDERS SHAREHOLDINGS TAKEOVER TRANSPARENCY VALUATION WEALTH SHAREHOLDING STRUCTURE BUSINESS SUPPORT SERVICES CORPORATE GOVERNANCE SHAREHOLDERS EXPROPRIATION MARKET LIBERALIZATION ETHICAL VALUES Leechor, Chad Protecting Minority Shareholders in Closely Held Firms |
| relation |
Viewpoint |
| description |
In all but a few advanced countries most
publicly listed corporations are closely held, with the main
shareholder typically playing an active role in management.
In emerging markets firms with active owner-managers provide
effective business solutions where business environments are
characterized by corruption and weak contract enforcement.
But they also pose a significant risk of asset expropriation
for minority shareholders. To promote investor confidence
and develop successful securities markets, this risk must be
mitigated. Some policy analysts argue that the way to do
this is to restrict ownership concentration. Such a step
could cause serious harm. This Note argues instead for
mitigating risk by strengthening corporate laws to safeguard
minority shareholdings, ensuring that markets for corporate
control work, and enforcing disclosure requirements for
firms and ethical standards for public officials. Modern
publicly traded corporations are commonly perceived to have
widely dispersed ownership and a separation of ownership and
control, with the control delegated to professional
managers. The owners of the firm rely on the board of
directors to supervise the managers, voting only on major
strategic decisions. The key issue of corporate governance
in this situation is to ensure that managers act in the best
interest of the shareholders. The board therefore plays a
pivotal role. |
| format |
Publications & Research :: Viewpoint |
| author |
Leechor, Chad |
| author_facet |
Leechor, Chad |
| author_sort |
Leechor, Chad |
| title |
Protecting Minority Shareholders in Closely Held Firms |
| title_short |
Protecting Minority Shareholders in Closely Held Firms |
| title_full |
Protecting Minority Shareholders in Closely Held Firms |
| title_fullStr |
Protecting Minority Shareholders in Closely Held Firms |
| title_full_unstemmed |
Protecting Minority Shareholders in Closely Held Firms |
| title_sort |
protecting minority shareholders in closely held firms |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1999/07/2531240/protecting-minority-shareholders-closely-held-firms http://hdl.handle.net/10986/11471 |
| _version_ |
1764416854951985152 |