Who Controls East Asian Corporations--and the Implications for Legal Reform
Author: Stijn Claessens, Simeon Djankov, and Larry H. P. Lang Date: 9/1/1999 (PDF, 200KB)
This Note reports on corporate control in nine East Asian economies. The analysis shows that the ten largest families in Indonesia, the Philippines, and Thailand control half the corporate sector (in terms of market capitalization). Their control is enhanced through pyramid structures and cross-holdings. The concentration of corporate wealth and the tight links between corporations and government may have impeded legal and regulatory development. To create incentives for better governance, East Asian governments may have to promote more competition, even by breaking up conglomerates, and curtail related-party lending by restricting ownership of banks.