GLOBALIZATION OF CORPORATE GOVERNANCE
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GLOBALIZATION OF CORPORATE GOVERNANCE SESSION 7
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GLOBALIZATION OF CORPORATE GOVERNANCE. SESSION 7. Outline. Evolution of Income, Exports and Capital Flows 1985 -2002 Premium for Good Governance in Regions Evolution of Equity Markets and Trading Largest Stock Exchanges Market Capitalization of NYSE New Listings in Major Markets 1998-2000 - PowerPoint PPT Presentation
Transcript of GLOBALIZATION OF CORPORATE GOVERNANCE
GLOBALIZATION OF CORPORATE GOVERNANCE
SESSION 7
Outline
Evolution of Income, Exports and Capital Flows 1985 -2002
Premium for Good Governance in Regions Evolution of Equity Markets and Trading Largest Stock Exchanges Market Capitalization of NYSE New Listings in Major Markets 1998-2000 Convergence of Governance Institutions Alternative Directions
1985 2002 1985 2002
Gross Domestic Product GDP
China and India 558.5 1,922.4 4.4 6
Low income countries, excl. India 579.3 634.7 4.5 2
Middle income countries, excl. China 2,234.1 3,702.9 17.5 11.5
High income countries 9,393.4 25,867 73.6 80.5
World 12,765.2 32,127 100 100
Exports of Goods and Services
China and India 79.1 685.1 3.4 8.7
Low income countries, excl. India 82.5 215.2 3.6 2.7
Middle income countries, excl. China 433.9 1,227.2 18.7 15.6
High income countries 1,718.7 5,732.6 74.3 72.9
World 2,314.1 7,860.2 100 100
Inflows of Foreign Direct Investment
China and India 1.7 62 2.9 9.8
Low income countries, excl. India 1.9 7.1 3.3 1.1
Middle income countries, excl. China 9.7 79.1 16.8 12.5
High income countries 44.7 484.3 77.1 76.6
World 58 632.6 100 100
Inflows of Total Portfolio Investment
China and India 2.3 49.8 1.7 6.9
Low income countries, excl. India 0.05 0.07 0.038 0.009
Middle income countries, excl. China 9.1 30 6.7 4.2
High income countries 123.8 639.9 91.6 88.9
World 135.2 719.8 100 100
Source: Gunter and Hoeven ( 2004:3).
Billions of USD Percentage Share of the World
Evolution of Income, Exports and Capital Flows 1985 -2002
Evolution of Income, Exports and Capital Flows
1001007 860.22 314.1World
72.974.35 732.61 718.7High income countries
15.618.71 227.2433.9Middle income countries excl. China
2.73.6215.282.5Low income countries excl. India
8.73.4685.179.1China and India
Exports of goods and Services
10010032 12712 765World
80.573.625 8679 9393.4High income countries
11.517.53 702.92 234.1Middle income countries excl. China
24.5634.7579.3Low income countries excl. India
64.41 922.4558.5China and India
Gross Domestic Product
2002198520021985
Percentage share of
world level
Billion of USD
1001007 860.22 314.1World
72.974.35 732.61 718.7High income countries
15.618.71 227.2433.9Middle income countries excl. China
2.73.6215.282.5Low income countries excl. India
8.73.4685.179.1China and India
Exports of goods and Services
10010032 12712 765World
80.573.625 8679 9393.4High income countries
11.517.53 702.92 234.1Middle income countries excl. China
24.5634.7579.3Low income countries excl. India
64.41 922.4558.5China and India
Gross Domestic Product
2002198520021985
Percentage share of
world level
Billion of USD
Source: Gunter and Hoeven (2004: 3)Notes: Data on gross domestic product and exports of goods and services are taken from the IMF’s WorldEconomic Outlook.
Domestic Market Capitalization (WFE 2009)
0 2000 2001 2002 2003 2004 2005 2006 2007 2008
25 000
20 000
40 000
5 000
10 000
USD bn
WFE total
(USD bn)30,956 26,595 22,833 30,627 36,848 40,888 50,650 60,854 32,551
Value of Share Trading (WFE 2009)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008
USD bn
WFE total
(USD bn)56,491 41,834 33,115 33,331 42,267 54,765 70,035 112,969 113,602
Largest Stock Exchanges in Market Capitalisation (year end 2008)
Exchange
USD bn USD bn % Change % Change
end-2008 end-2007 In USDIn local
currency
1 NYSE Euronext (US) 9,209 15,651 -41.2% -41.2%
2Tokyo Stock Exchange Group
3,116 4,331 -28.1% -41.4%
3 NASDAQ OMX 2,396 4,014 -40.3% -40.3%
4 NYSE Euronext (Europe) 2,102 4,223 -50.2% -47.8%
5 London Stock Exchange 1,868 3,852 -51.5% -33.4%
6 Shanghai Stock Exchange 1,425 3,694 -61.4% -64.0%
7 Hong Kong Exchanges 1,329 2,654 -49.9% -50.2%
8 Deutsche Börse 1,111 2,105 -47.2% -44.6%
9 TMX Group 1,033 2,187 -52.7% -41.8%
10 BME Spanish Exchanges 948 1,781 -46.8% -44.1%
Source: World Federation of Exchanges Statistics 2009.
Largest Exchanges in Share Trading (year end 2008)
Exchange
USD bn USD bn % Change % Change
2008 2007 In USDIn local
currency
1 NASDAQ OMX 36,446 28,116 29.6% 29.6%
2 NYSE Euronext (US) 33,639 29,114 15.5% 15.5%
3 London Stock Exchange 6,272 10,334 -39.3% -33.0%
4 Tokyo Stock Exchange Group 5,607 6,413 -12.6% -23.4%
5 Deutsche Börse 4,679 4,324 8.2% 2.1%
6 NYSE Euronext (Europe) 4,411 5,640 -21.8% -26.2%
7 Shanghai Stock Exchange 2,600 4,029 -35.5% -41.0%
8 BME Spanish Exchanges 2,410 2,970 -18.8% -23.4%
9 TMX Group 1,716 1,635 5.0% 5.6%
10 Hong Kong Exchanges 1,630 2,134 -23.6% -23.8%
Source: World Federation of Exchanges Statistics 2009.
NYSE Overview Statistics 2006
Year
Average daily volume (Millions
of shares)
Global market capitalization
($T)Companies
listed Percent
turnover Seat prices
2005 1,582 $20.80 2,779 102% $2,600,000
2004 1,457 $19.80 2,768 99% $1,515,000
2003 1,398 $17.30 2,750 99% $1,500,000
2002 1,441 $13.40 2,783 105% $2,550,000
2001 1,240 $16.00 2,798 94% $2,300,000
2000 1,042 $17.10 2,862 88% $1,700,000
1999 809 $16.80 3,025 78% $2,300,000
1998 674 $14.00 3,114 76% $2,000,000
1997 527 $11.80 3,047 69% $1,750,000
1996 412 $9.20 2,907 63% $1,450,000
1990 157 1,774 46% $430,000
1980 45 1,570 36% $275,000
1970 12 1,351 19% $320,000
1960 3 1,143 12% $162,000
Source: NYSE 2006
Global Comparison of Market Capitalization of Domestic Listed Companies 2006 ( USD Trillions)
Year
All WFE members
(a) NYSENYSE % of all Nasdaq Tokyo London
Deutsche Börse Euronext
2005 $40.90 $13.30 33% $3.60 $4.60 $3.10 $1.20 $2.70
2004 $37.10 $12.60 34% $3.50 $3.60 $2.80 $1.20 $2.40
2003 $31.30 $11.40 36% $2.80 $3.00 $2.40 $1.00 $2.10
2002 $23.10 $9.00 39% $2.20 $2.10 $1.80 $0.70 $1.60
2001 $26.80 $11.00 41% $2.90 $2.30 $2.10 $1.10 $1.80
2000 $30.90 $11.50 37% $3.60 $3.20 $2.60 $1.30 $2.30
1999 $35.60 $11.40 32% $5.80 $4.00 $2.80 $1.40 $2.40
1998 $26.30 $10.30 39% $2.50 $2.40 $2.30 $1.10 $1.80
1997 $22.30 $8.90 40% $1.70 $2.10 $2.10 $0.80 $1.30
1996 $20.10 $6.80 34% $1.50 $3.00 $1.70 $0.70 $1.10
1995 $17.50 $5.70 33% $1.20 $3.50 $1.30 $0.60 $0.90
1990 $9.60 $2.70 28% $0.30 $2.80 $0.90 $0.40 $0.50
1980 (b) $2.90 $1.20 41% $0.40 $0.20 $0.07 $0.09Source: NYSE (2006); WFE (2005)
US Investors Holdings of Non-US Equities2003
-450
50
550
1050
1550
2050
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
$ Billions % of All Equity Holdings
Source: Federal Reserve Board Flow of Funds
3%
5%
7%
9%
11%
13%
15%
3%
5%
7%
9%
11%
13%
15%
US$ Billions
Global Comparison of Annualized Trading (USD Trillions)
Year
All WFE members
(a) NYSENYSE %
of all Nasdaq Tokyo LondonDeutsche
Börse Euronext
2004 $41.80 $11.40 0% $8.50 $3.20 $5.10 $1.50 $2.50
2003 $33.60 $9.70 29% $7.10 $2.00 $3.60 $1.30 $1.90
2002 $33.80 $10.30 30% $7.50 $1.60 $4.10 $1.20 $2.00
2001 $40.30 $10.50 26% $11.00 $1.70 $4.60 $1.50 $3.20
2000 $51.80 $11.10 21% $19.80 $2.30 $4.60 $2.10 $1.80
1999 $34.30 $8.90 26% $10.50 $1.70 $3.40 $1.60 $1.30
1998 $24.50 $7.30 30% $5.50 $0.80 $2.90 $1.50 $1.10
1997 $20.10 $5.80 29% $4.50 $0.90 $2.00 $1.10 $0.70
1996 $14.30 $4.10 29% $3.30 $0.90 $1.40 $0.80 $0.50
1995 $10.90 $3.10 28% $2.40 $0.90 $1.20 $0.60 $0.40
1990 $5.90 $1.30 22% $4.50 $1.30 $0.50 $0.50 $0.20
1980 (b) $0.90 $0.40 44% $0.07 $0.20 $0.04 $0.02 $0.02Source: NYSE (2006); WFW (2005)
New Listings in Major Markets
0
100
200
300
400
500
600
700
1998 1999 2000 2001 2002 2003 2004 2005
Nasdaq
NYSE
London SE
Tokyo SE
Toronto SE
Australian SE
Deutsche Borse
Number of Companies
Source: WFE respective annual reports.
Development of International Principles of Corporate Governance Guidelines
OECD Principles pf Corporate Governance
1999-2004
OECD Business Sector Advisory Group
( 1998)
Corporate Governance ofNon-listed companies in
Emerging markets (2006)
OECD Guidelines on CorporateGovernance of state-owned
Enterprises (2005)
APEC & Pacific EconomicCo-operation Council
(2001)
Asian Development BankPrinciples
for Business Enterprises (2003)
Commonwealth Association
For Corporate Governance(1999)
European Bank for Reconstruction
and Development(1999)
European Commission of Corporate Governance
(2003)
United Nations EconomicCommission for Africa
(2002)
Corporate Governance Objectives
ANGLOAMERICAN
EUROPEAN
JAPANESE
(Shareholder Value)
?
(Corporate SocialResponsibility)
?
STAKEHOLDERS
MARKET
SHORTTERM
LONGTERM
Multiple Convergence of Governance Institutions and Relationships
MARKET
RE
LA
TIO
NS
HIP
S
STAKEHOLDERS
Accountability(Institutional Investors)
GERMAN
JAPANESE
LAW
PRINCIPLES
Shareholder Value(Capital Markets)
ANGLO-AMERICAN
ACCOUNTABILITY /WEAK RESPONSIBILITY
REPRESENTATION / STRONG RESPONSIBILITY
Transparency Disclosure
(Regulators / Investors)
Responsibility (Institutional Investors
Stakeholder Communities)
Corporate Governance Convergence: Alternative Directions
INSTITUTIONS
ACCOUNTABILITY /
WEAK RESPONSIBILITY
REPRESENTATION /
STRONG RESPONSIBILITY
CO
NV
ER
GE
NC
E
STRONG
WEAK
DIVISIBLE INDIVISIBLE
GLOBAL CROSSREFERENCE
NATIONAL CROSSREFERENCE
INSTITUTIONAL COMPLEMENTARITY
CHICAGO SCHOOL
( IMPROVED VARIETY OFGOVERNANCE SYSTEMS)
( VIABLE DISTINCTIVEGOVERNANCE SYSTEMS)
( UNIVERSAL MARKETBASED SYSTEM) ( UNITARY SYSTEM )
Source: Adapted from Bratton and McCahery, 1993: 30.
