More than 98 percent of commercial entities in Palestine are not covered by existing corporate governance codes, which apply to companies listed on the Palestine Stock Exchange and commercial banks. Most of these are structured as family firms — whether in ownership or management — which creates special difficulties for corporate governance.
To address the thousands of family firms that form the heart and soul of the Palestinian private sector, CIPE partner the Palestine Governance Institute (PGI) recently published a Corporate Governance Manual for Family Firms (available in Arabic and English) with the Federation of Palestinian Chambers of Commerce, Industry and Agriculture.
This seminal publication — the first of its kind in Palestine — was informed by extensive consultations with local experts, family firms themselves, and other stakeholders including lawyers and academics.
PGI engaged in extensive outreach to the business community in developing these guidelines, including conducting a baseline assessment through interviews with over 100 owners and managers of family firms across the West Bank and Gaza.
Health care professionals in Egypt conduct a stakeholder analysis to help spell out governance principles for Egyptian hospitals.
A hip replacement in the United States, paid for out-of-pocket (i.e., without health insurance), would cost anywhere from $11,000 to $125,000, depending on what hospital you go to, according to a 2013 survey of 100 hospitals featured on National Public Radio. And that was among the hospitals that, when asked, could actually produce a quote – 40 of the 100 hospitals surveyed couldn’t quote a price at all.
Those fortunate enough to have insurance don’t need to worry about price-shopping. When I go to my primary care physician, I pay a $20 co-pay. (Under our previous insurance, provided by my wife’s former employer, it was $10. Why the difference? Who knows?) I have no idea how much my insurance company pays the doctor. I suppose I could find out, but… honestly? There’s really no compelling reason for me to do so. It’s $20 no matter who I see.
And it turns out that, even if there were more incentive for me to price-shop, more expensive hospitals aren’t necessarily better hospitals, according to a 2014 study.
Academics and development practitioners have long sought out commonalities of sustainable economic growth in different economies around the world. While there is no one formula for achieving economic growth and stability, inclusive growth and accountable governance have been central components of progress. Effective governance, while not traditionally thought of as part of an international development agenda, has come to be seen as an essential component of international economic development.
In the latest Economic Reform Feature Service article, consultant James Michel explores the complex relationship between good governance and economic development around the world. He looks at the ways in which academics and practical experience shape these two intertwined factors of development.
By Hyeji Kim
Any corporate compliance program needs a strong relationship between the board of directors and the compliance and ethics officer in order to be effective. In 2010, the Society of Corporate Compliance and Ethics (SCCE) and the Health Care Compliance Association (HCCA) conducted a study which showed that the relationship between the Chief Ethics and Compliance Officers (CECOs) and boards of directors was much weaker than it should be. In 2013, SCCE conducted the study again to see if there were any changes.
The recently published 2013 study, based on over 600 responses from compliance and ethic professionals in the SCCE and HCCA database, seems to be on a much brighter note with generally positive findings.
Markets thrive on transparency. (Photo: Wikimedia Commons)
Many of the world’s largest and fastest-growing companies now come from emerging markets. But according to a recent report, these companies lag behind their more established peers in transparency — a handicap that could prevent them from becoming true global leaders in their fields.
Looking at 100 large multinational companies from 16 emerging market countries, Transparency International found an average transparency score of just 3.6 out of 10. A 2012 report on the world’s largest companies using the same methodology found an average score of 4.7. And while only one in five of the emerging-market multinationals had a transparency score above 5.0, just under half of the largest companies did.
These results should be deeply concerning for the executives of these companies, their investors, and the governments and citizens of countries where they operate.
By Andrew Wilson and Marc Schleifer
Last month in Karachi, CIPE’s Deputy Director for Strategic Planning and Programs Andrew Wilson and Pakistan Country Director Moin Fudda took part in a conference organized by the Pakistan Institute for Corporate Governance, together with CIPE and the Association of Chartered Accountants, on the corporate governance implications of concentrated ownership in listed firms. Wilson was invited to give the keynote address and provide an international perspective at this event, which received coverage by the local press in Pakistan. To help spur discussion, we wanted to share Wilson’s remarks on the CIPE blog, since concentrated ownership is an issue that firms, shareholders and regulators grapple with worldwide.
Some of the basic theories of corporate governance start with an idealized picture of a firm with widely dispersed ownership, but in practice, the theoretical model of diffuse ownership faces problems. When a company is owned by numerous small shareholders, it can be difficult for them to get information about the firm’s operations, meaning that a great deal of the real control rests with management; the principal-agent problem arises and company performance can suffer, to the detriment of the owners (the shareholders). This would seem to argue in favor of a more concentrated ownership system, and in fact, around the world we see that diffuse ownership is indeed the exception, not the rule.
In most countries, the dominant organizational form is concentrated ownership, with control of most firms either in the hands of a family, a larger holding company, major institutional investors, or in some cases the state. This is true even in developed economies with robust capital markets and a high level of private ownership, where individual listed corporations are often part of a complex network of international or domestic holdings, which themselves in turn may or may not be listed. There are various reasons why this might be the case.