This report assesses El Salvador scorporate governance policy framework. It highlights recentimprovements in corporate governance regulation, makespolicy recommendations, and provides investors with abenchmark against which to measure corporate governance inEl Salvador. The OECD Principles focus on private-sectorpublicly traded companies, both financial and nonfinancial,but are also applicable to other public interest entities,including banks, insurance companies, and state-ownedenterprises The equity market in El Salvador is small andhas not showed much growth in the past five years. Mostobservers blame unwieldy approval processes for new shareofferings, and the predominance in the economy of small- andmedium-sized family-owned companies which do not have aninterest in becoming public. Given the limited depth of themarket, both regulator (SSF) and stock exchange (BVES) havetaken measures towards regional integration. El Salvadortoday is participating in a regional initiative to developan integrated Central American capital market with Panamaand Costa Rica. Good corporate governance enhances investortrust, helps to protect minority shareholders, and canencourage better decision making and improved relations withemployees, creditors, and other stakeholders. It is animportant prerequisite for attracting the patient capitalneeded for sustained long-term economic growth.
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