6. Comparative corporate governance Ilir Haxhi

Learning objectives grasp the concept of corporate governance contrast the differences between alternative models of corporate governance and more particularly the shareholder versus stakeholder model provide a societal explanation for the differences between these corporate governance models evaluate the position of the Japanese model of corporate governance vis-à-vis the shareholder and stakeholder models understand the European difficulties in developing one unified European model of corporate governance understand how corporate governance is practiced in the BRIC countries assess the differences between corporate governance issues in large, small and medium-sized companies recognize the cultural and institutional influences on the worldwide diffusion of codes of corporate governance reflect on the effects of globalization and contextual drivers to convergence or divergence of corporate governance systems.

Chapter Outline (1) 6.1Introduction 6.2 Major capitalist models of corporate governance The Anglo-American model The Rhineland model The Japanese model of corporate governance 6.3Corporate governance systems in Western Europe Capital markets and regulation The structure of ownership The relationship between stakeholders and management Company law and the structure of top management institutions Consensus and the institutions of employee representation The institution of employee representation Corporate restructuring

Chapter Outline (2) 6.4Corporate governance in BRIC countries Brazil Russia India China 6.5Codes of corporate governance Codes and their convergence 6.6 Conclusions Study questions Further reading Notes References

Table 6.1 Differences between the ‘shareholder’ and ‘stakeholder’ models

Table 6.2 Structure of ownership in some countries like UK, US, Germany, NL or France (2007) in %

Table 6.3 Market capitalisation of the main OECD countries (2012)

Table 6.4 Ownership structure of the EU countries

Table 6.5a Information on mergers and acquisitions. Target country by volume – global private equity deals

Table 6.5b Information on mergers and acquisitions. Target country by volume: Western Europe deals

Table 6.6 The Anglo-Saxon and Rhineland models of corporate governance: major weaknesses and strengths

Study questions 1.Explain the main differences between the ‘shareholder’ and the ‘stakeholder’ models of corporate governance. 2.What is the broad definition of corporate governance? 3.What do you understand by ‘effective corporate governance’? 4.Explain how the German accounting system differs from the US one. 5.Explain the main differences between the Anglo-American and the Rhineland model of corporate governance. 6.What is meant by the terms ‘exit’ and ‘voice’ in the governance area? 7.What are the main strong and weak points of the Japanese system of corporate governance? 8.Explain why the take-over option of the Anglo-American model of corporate governance has militated against enterprise growth from small to medium size. 9.Is the German model converging towards the Anglo-American model of corporate governance? Give reasons for your argument. 10.Would it be economically beneficial for the German model to converge towards the Anglo- American model? 11.Explain the effects of globalization forces on corporate governance systems.