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Corporate Misgovernance at the World Bank

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  • Ashwin Kaja

    () (Harvard Law School)

  • Eric D. Werker

    () (Harvard Business School, Business, Government and the International Economy Unit)

Abstract

We test for evidence of corporate misgovernance at the World Bank. Most major decisions at the World Bank are made by its Board of Executive Directors. However, in any given year the majority of the Bank's member countries do not get a chance to serve on this powerful body. In this paper, we empirically investigate whether board membership leads to higher funding from the World Bank's two main development financing institutions, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). We find that developing countries serving on the Board of Executive Directors can expect an approximate doubling of funding from the IBRD. In absolute terms, countries serving on the board are rewarded with an average $60 million "bonus" in IBRD loans. This is more likely driven by soft forces like boardroom culture rather than by the power of the vote itself. We find no significant effect in IDA funding.

Suggested Citation

  • Ashwin Kaja & Eric D. Werker, 2009. "Corporate Misgovernance at the World Bank," Harvard Business School Working Papers 09-108, Harvard Business School.
  • Handle: RePEc:hbs:wpaper:09-108
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    File URL: http://www.hbs.edu/research/pdf/09-108.pdf
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    Cited by:

    1. Axel Dreher & Stephan Klasen & James Raymond Vreeland & Eric Werker, 2013. "The Costs of Favoritism: Is Politically Driven Aid Less Effective?," Economic Development and Cultural Change, University of Chicago Press, vol. 62(1), pages 157-191.
    2. repec:got:cegedp:97 is not listed on IDEAS

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