Corporate Misgovernance at the World Bank

51 Pages Posted: 30 Mar 2009

See all articles by Ashwin Kaja

Ashwin Kaja

Harvard Law School

Eric Werker

Harvard University - Business School (HBS)

Date Written: March 23, 2009

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

Kaja, Ashwin and Werker, Eric, Corporate Misgovernance at the World Bank (March 23, 2009). Harvard Business School BGIE Unit Working Paper No. 09-108, Available at SSRN: https://ssrn.com/abstract=1367146 or http://dx.doi.org/10.2139/ssrn.1367146

Ashwin Kaja

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States

Eric Werker (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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