Flashcards in Session 2 Deck (11):
What are the differences in ownership patterns?
- highly dispersed with no dominant owner
- concentrated with single or block holders dominant
Which objects does an affect have on corporate governance?
- markets for corporate control
- cultural influences on corporate governance
What will in finance markets with large, liquid and with high turnover happen?
- chances to hostile take-over bids
- consequential loss of board control
- widespread merger and acquisition activity
What will in finance markets with small, illiquid and with low turnover happen?
market for corporate control will be weaker and merger and acquisition activity infrequent
Which five broad systems of corporate governance exist?
- American rule-based model
- United Kingdom/Commonwealth principles-based model
- Continental European two-tier model
- Japanese stakeholder-orientated network model
- Asian family-based model
What are the forces for convergence?
- GC codes of good practice around the world
- securities regulators
- international accounting standards (IAS)
- global concentration of audit practices
- globalization of companies
- raising capital on overseas exchanges
- international institutional investors
- private equity funding
- cross-border merger of stock exchanges
- research publication, conferences and professional journals
What are the forces for differentation?
- legal differences in company law, contract law and bankruptcy law
- different standards in legal processes
- stock market differences - capitalization, liquidity
- differences in the market for control
- differences in ownership structures
- historical differences and expectations
- cultural differences
What are the forces for development?
- preparation of "principles of good governance" by Anglo-American investors
- German CG not comparable to systems in other countries
- foreign investors with problems to understand the complex German CG-System
- restrictive information policy in Germany --> "information on demand"
--> lack of transparency
What are the goals of the German CG-Code?
- documentation of German governance guidelines
- norms and values for responsible CG
- creation of transparency
How is the structure of the German CG-Code built?
- legal regulations (§161 AktG)
- recommendations ("shall" provisions)
- suggestions ("should" or "can" provisions)