Poor s found that, a year later, these firms total debt amounted to 14.2 trillion, eclipsing the 13.1 trillion of outstanding debt in the United States and making China the world s largest issuer of corporate debt.

This suggests that net private borrowing using debt instruments has been rather small over this recent period.

How is that possible? As corporate finance experts have been saying for 30 years, having too much debt and too little equity is costly, so reducing the face value of debt can sometimes benefit not only equity holders, but also debt holders.

Argentina s interests and those of its creditors were thus aligned both wanted growth. It was the equivalent of a Chapter 11 restructuring of American corporate debt, in which debt is swapped for equity, with bondholders becoming new shareholders.

Having more than doubled since its crisis induced trough, the US equity market not to mention its amply rewarded upper income shareholders has been the principal beneficiary of the Fed s unconventional policy gambit. The same is true for a variety of once risky fixed income instruments from high yield corporate junk bonds to sovereign debt in crisis torn Europe.

IMF staff have produced a number of reports on corporate insolvency, bank insolvency and the restructuring of unsustainable sovereign debt, including Orderly and Effective Insolvency Procedures Key Issues (1999) (analysing major policy choices to be addressed in the design of an effective corporate insolvency system).

Both are cases of severe economic crisis, to be sure. But the eurozone s problems stem from high levels of government debt, while South Korea faced massive capital flight and a collapsing currency and almost all of the debt was in the corporate sector.

Grundsatzkommission Corporate Governance (German Panel for Corporate Governance) (2000). Corporate Governance Rules for German Quoted Companies.

The solution to breaking the nexus between sovereign debt crises and banking crises is straightforward limit banks to lending where evaluation of borrowers willingness and ability to repay isn t a great leap in the dark. This means no cross border sovereign debt (or esoteric instruments, such as collateralized debt obligations).

Indeed, Argentina s sovereign default happened almost simultaneously with the demise of the currency board, but corporate renegotiations were a protracted affair. Eventually, most companies avoided bankruptcy, mainly owing to the fourth ingredient in Argentina s exit toolkit capital controls that provided the legal umbrella to stop external corporate debt servicing.

A lower rate would strengthen incentives for investment and job creation in the US, and weaken incentives for tax avoidance. It would also reduce numerous efficiency reducing distortions in the US tax code, including substantial tax advantages for debt financing over equity financing and for non corporate businesses over corporate businesses.

Statement on Global Corporate Governance Principles. International Corporate Governance Network.

The Argentine Government undertook a first debt swap in June 2001 government bonds with a face value of 29.5 billion were voluntarily exchanged for longer term instruments.

The most prominent example is money market mutual funds. These entities take money from investors and buy various kinds of assets, some of which may be risky like short maturity corporate debt.

Financial bubbles emerge wherever liquid asset markets exist. Indeed, the objects of such speculation astound the imagination tulip bulbs, gold and silver mines, real estate, the debt of new nations, corporate securities.

What the market is saying is not that the economy has too much debt, but that it has too much private debt, which is why prices of corporate bonds are low and firms find financing expensive. The market is also saying clearly and repeatedly that the economy has too little public US government debt, which is why everyone wants to hold it.

Revised Statement on Global Corporate Governance Principles. International Corporate Governance Network.

Finance Committee on Corporate Governance (2000). Malaysian Code on Corporate Governance.

The notable exceptions to this trend are countries that manage cross border capital flows, especially the corporate sector s exposure to foreign currency debt. Indeed, certain types of capital flow management including limiting domestic debt denominated in foreign currency for both firms and households have been shown to increase resilience.

Corporate Governance Committee (2004). The Belgian Code on Corporate Governance ('Lippens Code')

Committee on Corporate Governance (1999). Code of Best Practice for Corporate Governance.

Corporate strategy

Corporate responsibility

Corporate leaders realized that economic incentives accrued from being a good corporate citizen.

Committee on Corporate Governance (1997). Corporate Governance in the Netherlands Forty Recommendations (Peters Code).

European Corporate Governance Institute. (In particular, see index of corporate governance codes by country.

The recent equity market rally is largely divorced from fundamentals and is driven by speculative, debt financed purchases. The outlook for corporate profits remains weak the country s equity supply is growing and valuations are stretched.

Corporate specific reasons.

Certainly, there are some good economic reasons why lenders have such an insatiable appetite for debt. Imperfect information and difficulties in monitoring firms pose significant obstacles to idealized risk sharing instruments.

Third, while pesification removes balance sheet losses from domestic foreign currency debts, external contractual obligations cannot be redenominated unilaterally. Thus, the exit from the dollar peg requires a restructuring of external debt, both sovereign and corporate.

Moreover, the extremes of collapse were amplified by unnecessarily tight monetary policies which deepened the debt deflation process, served to depress output and employment and caused serious dislocations in the corporate and financial sectors (Stiglitz, 2002).

Government Commission on the German Corporate Governance Code (2005). The German Corporate Governance Code ('Cromme Code')

JPK Working Group I on Corporate Governance in Malaysia (2000). Report on Corporate Governance in Malaysia.

Debts and debt servicing, regrettably, are steadily eroding the financial base of these countries, systematically preventing them from providing, and their citizens enjoying, the basic rights contained in the human rights instruments.

The Secret Corporate Takeover

The Corporate Tax Conundrum

Whose Corporate Social Responsibility?

Operationalizing the corporate strategy

Corporate and income tax

In the ensuing discussion, questions were raised regarding the precise definitions of general terms such as corporate responsibility , corporate social responsibility and positive corporate contribution , and regarding the notion of a corporate responsibility for development, as well as UNCTAD's mandate in this regard.

The fundamental problems that triggered alarm bells in the first place including real estate bubbles, local government debt, rapid growth in shadow banking activity, and rising corporate leverage ratios remain unresolved. Of these, the most immediate threat to China s economic and financial stability is the combination of high borrowing costs, low profitability for nonfinancial corporations, and very high corporate leverage ratios.

LONDON The Great Recession of 2008 2009 was triggered by excessive debt accumulation and leverage on the part of households, financial institutions, and even the corporate sector in many advanced economies. While there is much talk about de leveraging as the crisis wanes, the reality is that private sector debt ratios have stabilized at very high levels.

Local currency government debt markets have performed fairly well during the crisis, while local currency corporate debt markets have played a more modest role as a vehicle for longer term finance. This suggests that domestic reforms aimed at reducing issuance costs, improving disclosure requirements, enhancing creditors rights frameworks, and tackling other inhibiting factors could bring high returns.

Instituto Brasileiro de Governança Corporativa (Brazilian Institute of Corporate Governance) (2001). Code of Best Practice of Corporate Governance.

General Motors Board of Directors (2000). GM Board of Directors Corporate Governance Guidelines on Significant Corporate Governance Issues.