Download State of Corporate Governance in Arab Countries

Corporate Governance in
Arab Countries
Dr. Najib Harabi
Professor of Economics
UAS Northwestern Switzerland
Contents
• Introduction
• Corporate Governance and Economic
Development
• State of Corporate Governance in Arab
Countries
• Summary and Conclusions
Introduction
• Big challenges facing Arab economies and
societies
• Heavy involvement of the State in
economy
• Poor development of private sector:
skewed size distribution of Arab firms
• Multiple causes: investment climate and
inadequate corporate governance
Corporate Governance and
Economic Development
•
•
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•
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Increased access to external financing
by firms.
Lowering of the cost of capital and
associated higher firm valuation.
Better operational performance through
better allocation of resources and better
management.
Reduced risk of financial crises.
Better relationship with all stakeholders.
State of Corporate Governance
in Arab Countries
• two sets of empirical data, both of them
are of qualitative nature
• 3 case studies on corporate governance in
Morocco, Egypt and Jordan.
• The second source of information is the
regional roundtable (focus group)
discussions, organized by international
and regional organizations
State of Corporate Governance
in Arab Countries
• One major key finding is that the legal and
regulatory frameworks of the assessed
Arab countries are largely compliant with
the OECD Principles of corporate
governance.
• However, practices are not. The difficulty
of the assessments is to reflect properly
the discrepancies between the letter of the
law and compliance
State of Corporate Governance
in Arab Countries
• Corporate governance issues have not been
ignored in public debates in the MENA region.
Practitioners from capital markets, banks, public
and private sector representatives and other civil
society groups have accepted the need to
address corporate governance reforms as one
of the crucial topics affecting the economic
growth and development of firms, industries and
whole economies in their region.
State of Corporate Governance
in Arab Countries
• Several meetings and conferences at the
national and regional level have taken
place. Appropriate and up-to-date
recommendations regarding corporate
governance reform in the MENA region
have been adopted in those events.
• It is now up to the decision makers at all
levels to implement those
recommendations.
Corporate Governance in Arab
Countries: Policy conclusions
• Better governance in general: Political,
economic etc. (political and institutional
reform)
• Enhancing the principle “rule of law”
• Better competition policy in product and
factor markets
• Better regulation of financial markets and
institutions