lecture 3 (3)

Question 1

five types of shareholders (china)

Answer 1

1. Central gov’t
2. Legal persons (institutional founders)
3. Emplyoees
4. Domestic institutions
5. Foreign investors (B and H) shares

Question 2

India corporate control in asia (bombay stock exchange)

Answer 2

Characterized by concentrated ownership and control

ownership structure complex and opaque

Frequent use of cross– holdings and ownership pyramid

Control is held indirectly via intermediate firms, holding companies and trust

Question 3

main legal families

Answer 3

British common law

Civil law (french, german, scandinavian)

Question 4

Common law

Answer 4

Case based law

More flexible than civil law

It can easily adapt new forms of managerial misuse

Stock market largest

Question 5

Civil law

Answer 5

Based on interpretation of the legal text

Less flexible; bad managers behaviors are slowly identified

Shareholder protection is lowest, debtholder protection is highest

Ownership concentration is highest –> a good substitute for low investor protection

Question 5

Legal families When investor protection is high

Answer 5

Capital markets are highly developed

INvestors are more willing to invest

You can sue the managers, receive excess cash flow easily

Basically, reduing P&A problem

Question 6

Legal families (weak investor protection)

Answer 6

Firms cash flow can be entrenched by the managers

Hgih P&A problem

Lower economic growth as a result of low-investment

Question 7

Commercial banks

Answer 7

Specialized in payment and financial intermediation

Question 8

Investment banks

Answer 8

Specialized on securitization M&A etc.

Question 9

The economic and political context giving rise to globalization Post war–> cold war

Answer 9

Workers right

Emergence of welfare state

Powerful trade and worker unions

Managers have to deal with all these unions

Co-determination –> strong employee voice (especially in teh strategic sectors)

Question 10

The economic and political context giving rise to global capitalism 1960-1980

Answer 10

Unprecedented economic growth in the west

Trade deficit in US> due to vietnam ware –> print more money – higher inflation

Oil crisis 73/74

strong government intervention especially during the period of recession to counteract the lack of demand from households and corporations