Investing in BRIC Countries: Evaluating Risk and Governance in Brazil, Russia, India, and China

Investing in BRIC Countries: Evaluating Risk and Governance in Brazil, Russia, India, and China

Chart a course for success in the fertile terrain of BRIC investing! The world’s largest and fastest-growingemerging markets are those of the BRICnations―Brazil, Russia, India, and China.Combined, these countries house more than40 percent of the world’s population, andtheir respective GDPs are growing at animpressive rate. This economic success comes partly from atrend toward good corporate governance, aconcept virtually unheard of in these fournations just a decade ago. Still, the BRICshave a long way to go. Corruption, doubledealings,and other conflicts of interest areregular business practices for far too manycompanies. Although investing in BRICnations can be wildly profitable, you mustfamiliarize yourself with the realities oftheir corporate governance to avoid catastrophe. With Investing in BRIC Countries , youare equipped with the best available toolfor detecting the signs of poor governance.Edited by Standard & Poor’s® equityresearch and governance group, it detailsthe group’s highly successful approach toanalyzing risks in emerging economies. Withcase studies illustrating the effectiveness ofcorporate governance scrutiny, Investingin BRIC Countries examines the economicstructure and governance status of eachBRIC nation―and then explains how to: Detect the malevolent influences of apowerful minority of shareholders - Protect yourself from misleading or falseaudits and risk assessments - Recognize regulatory weaknesses withregards to shareholder rights - Distinguish effective boards of directorsfrom weak or corrupt ones As the financial crises in Mexico, Russia,and Asia during the 1990s prove, corporategovernance is the pivot on which anemerging market’s success or failure hinges.Before entering one or more BRIC markets,perform the due diligence they require. Investing in BRIC Countries is the besttool available for mitigating your exposureto risky deals and other problems that canarise when dealing with international companies. Svetlana Borodina is director of corporate governance at Standard & Poor’s® Equity Research in Moscow. She served in a number of senior executive positions in the areas of investor relations and financial communications with TNKBP and Sibneft oil companies. Oleg Shvyrkov is associate director for Standard & Poor’s® Governance Services group and serves as lead analyst on corporate governance scores and GAMMA scores at MTS, MDM Bank, EroChem, and other companies in Russia, Kazakhstan, and Brazil. The authors live in Moscow, Russia. The definitive guide to evaluatingcorporate governance in theworld’s largest emerging markets Investing in Brazil, Russia, India, and China is a whole new game. Inorder to avoid nightmare scenarios, you have to inform yourself aboutthe corporate governance problems rampant in BRIC companies—generalcorruption, weak boards of directors, individual shareholders wieldingundue influence, and other critical conflicts of interest. You’ll find, though,that the benefits are well worth it. Investing in BRIC Countries explains: Why governance is critical to international investing success - The secrets of S&P’s® methodology for analyzing governance inemerging markets - How to apply advanced thinking based on a number of real-life cases Written by two high-level figures at Standard & Poor’s® who apply theircompany’s own methods and processes, this is a detailed road map toanalyzing corporate governance in the world’s top emerging markets, helpingyou make sound decisions and proper evaluations prior to investingin them. Svetlana Borodina is director of corporategovernance at Standard & Poor’s® EquityResearch in Moscow. She served in a numberof senior executive positions in theareas of investor relations and financialcommunications with TNKBP and Sibneftoil companies. Oleg Shvyrkov is associate director forStandard & Poor’s® Governance Servicesgroup and serves as lead analyst on corporategovernance scores and GAMMAscores at MTS, MDM Bank, EroChem, andother companies in Russia, Kazakhstan,and Brazil. The authors live in Moscow, Russia. Investing in BRIC COUNTRIES Evaluating Risk and Governance in Brazil, Russia, India & China By SVETLANA BORODINA, OLEG SHVYRKOV, JEAN-CLAUDE BOUIS The McGraw-Hill Companies, Inc. Copyright © 2010 McGraw-Hill, Inc. All rights reserved. ISBN: 978-0-07-166406-6 Contents Foreword Good Governance Does Make a Difference Peter MontagnonPreface Why Governance Is Key to the Future of BRIC Countries Svetlana Borodina and Oleg ShvyrkovPART 1 Introducing the BRICs and Their Governance StatusChapter 1 A Guiding Light for Investors in Brazil Eduardo G. ChehabChapter 2 Corporate Governance Is Advancing in Russia Oleg ShvyrkovChapter 3 Corporate Governance Is Growing Modestly in India Preeti S. ManerkarChapter 4 Moving toward Accountability in China Warren WangPART 2 Fundamentals of Emerging Market Governance Analysis Principal Contributor: Oleg ShvyrkovChapter 5 Ownership Influences: The State, Company Founders, Majorit