Lecture 6 Flashcards
(12 cards)
What are the five major corporate governance models?
- Anglo-American (UK & US) – Market-based, shareholder-focused, dispersed ownership.
- German Model – Two-tier board, stakeholder-focused, strong bank governance.
- Scandinavian Model – Stakeholder-inclusive, state influence, board diversity.
- Japanese Model – Keiretsu networks, strong business ties, weak independent oversight.
- Chinese Model – State-controlled enterprises, high ownership concentration, evolving transparency.
What are the key features of the Anglo-American corporate governance system?
Market-oriented with a focus on shareholder value creation.
One-tier boards with strong CEO influence.
Dispersed ownership – No dominant shareholders.
Strong legal protection for investors.
What are the major risks in the US governance model?
❌ Short-termism due to quarterly earnings pressure.
❌ High executive compensation leading to governance concerns.
❌ Corporate scandals (e.g., Enron, Lehman Brothers).
What are the main characteristics of Germany’s corporate governance system?
Two-tier board system:
Supervisory Board (Non-executives) oversees the Management Board (Executives).
Stakeholder-oriented (employees, banks, shareholders).
Bank governance plays a significant role in financing and decision-making.
Concentrated ownership – Large shareholders (family, state, banks).
What are the strengths and weaknesses of the German model?
✔ Strengths: Long-term stability, strong worker representation.
❌ Weaknesses: Less flexibility, low minority shareholder protection.
What makes the Scandinavian model unique?
Stakeholder-focused governance (workers, suppliers, environment).
Board diversity encouraged (e.g., gender quotas in Norway).
State ownership in key industries.
Concentrated ownership (1-2 major shareholders often hold significant control).
Enviromental focus as well
What is the Keiretsu system in Japan?
A network of cross-shareholding companies that support each other financially and operationally.
Coopetition
What are Japan’s governance weaknesses?
❌ Limited independent board oversight.
❌ Opaque governance due to cross-holdings.
❌ Low transparency in executive compensation.
How is corporate governance structured in China?
State-Owned Enterprises (SOEs) dominate the market.
Highly concentrated ownership (government control).
Two-tier board system, but government influences appointments.
Rapidly evolving regulations to improve transparency.
What are governance risks in China?
❌ Opaque corporate structures.
❌ State influence in decision-making.
❌ Regulatory unpredictability.
❌ Transparency distrust
What are the key global trends in corporate governance?
Convergence of governance models – More focus on transparency & accountability.
Rise of institutional investors – Influence of BlackRock, Vanguard.
Say on Pay regulations – Greater control over executive compensation.
ESG reporting requirements – Sustainability and responsible business practices.
Clawback provisions – Firms can reclaim bonuses from executives after scandals.
