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Prospects for Emerging-Market Flows Amid Investor Concerns about Corporate Governance

Listed author(s):
  • Helmut Reisen

Concerns about corporate governance standards have often centred on emerging markets, notably after the 1997-98 Asian crisis. A series of corporate scandals have now raised investor concerns over the quality of earnings and opaque balance sheet structures in the US and other developed countries. The paper assesses the impact of higher risk on developed-country corporate assets on the prospects for private capital flows and their composition to emerging-market economies. While investors have been paying a higher premium (in terms of higher price/earning ratios and lower interest rates) for US assets partly because of the perceived superiority in the quality of their earnings reporting, one could expect a shift away from asset classes with rising risk to assets where risks were already high — emerging-market debt and equity, for example. Higher flows to emerging markets, however, can be impeded by the negative repercussion of lower asset prices in the developed markets on the real ... Les préoccupations suscitées par les modalités de gouvernance des entreprises se sont focalisées le plus souvent sur les marchés émergents, surtout après la crise asiatique de 1997-98. Mais aujourd’hui, après une série de scandales, les investisseurs s’interrogent sur la qualité des bénéfices d’exploitation des entreprises et sur l’opacité de leurs bilans comptables, aux États-Unis comme dans d’autres pays développés. Ce Document technique évalue l’impact qu’aurait une hausse du niveau de risque des actifs financiers des entreprises des pays développés sur les mouvements de capitaux privés à destination des économies émergentes, ainsi que sur leur composition. Jusque-là, les investisseurs ont accepté de payer une surcote sur les actifs américains (via des ratios coût/bénéfice supérieurs et des taux d’intérêt inférieurs), notamment du fait de la plus grande qualité supposée des résultats d’exploitation. Désormais, on peut s’attendre à ce que les investisseurs se désengagent de ...

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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 201.

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Date of creation: 01 Nov 2002
Handle: RePEc:oec:devaaa:201-en
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