Corporate Misgovernance

Corporate Misgovernance at the World Bank
Ashwin Kaja
Eric Werker
Working Paper
09-108
Copyright © 2009 by Ashwin Kaja and Eric Werker
Working papers are in draft form. This working paper is distributed for purposes of comment and discussion only. It may not be reproduced without permission of the copyright holder. Copies of working papers are available from the author. Corporate Misgovernance at the World Bank
Ashwin Kaja
Eric Werker*
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. March 2009
*
Harvard Law School and Harvard Business School respectively. E-mail addresses: [e-mail]; [e-mail]. We thank Tiffany Chan, Axel Dreher, Jeff Frieden, Arif
Lakhani, Tracy Li, Linda Liu, James Vreeland, Matt Young, Kenny Mirkin, and seminar participants at the
Political Economy of International Organizations and International Political Economy Society meetings for insightful conversations and feedback, and Byron Hussie, Michael Sorell, and James Zeitler for excellent research assistance. Werker is grateful to the HBS

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