Corporate Leverage in Emerging Markets: Discussing the Implications for Legislative Fiscal Oversight

Abstract

The last decade has witnessed a surge of leveraging activity among emerging market corporations, and this has major implications both for riskiness in global equities, as well as for the mechanisms for fiscal oversight such as legislative scrutiny of national debt levels in developing countries. This discussion provides an overview of the major concerns that have emerged due to corporate leveraging in emerging markets from (1) a legislative scrutiny standpoint, and (2) stock market returns. The discussion emerges at a time (2016) when emerging economies are already faced with severe stock market turmoil, making these considerations all the more pertinent and timely.

Keywords: Leverage; Emerging Markets; Corporate Debt; Debt Crisis; Accountability; Governance