This essay describes the problematic of corporate governance systems, which, if they
are weak, distort the efficient allocation of resources, undermine opportunities on a level
playing field and, ultimately, hinder investment and economic development. Recent high
profile scandals, financial crises and institutional failures in Russia, Asia and the United
States have brought corporate governance issues to the fore in modern western, as well
as developing countries, transitional economies, and emerging markets.
Firstly, I will give a definition of corporate governance and introduce the OECD
Principles, which are the foundation of all corporate governance systems. Secondly, I
discuss the driving forces and the importance of corporate governance. I will then
concentrate on national differences and recent developments, where I am particularly
looking at the UK and Germany. A special chapter about the Anglo-American influence
follows and leads to the last chapter, which covers the current situation and possible
future effects of applied corporate governance systems in developing and transitional
countries.
The purpose of this paper is not to go deep into legal details of corporate governance,
but reveal its importance for society (stakeholder), economy (corporations and capital
markets) and future development of emerging market economies.
Table of Contents
1. Executive Summary
2. Definition of Corporate Governance
The OECD Principles of Corporate Governance
3. Importance of Corporate Governance
Why do corporations and nations need corporate governance?
4. The Driving Forces of Corporate Governance
The Growing interest for corporate governance
5. National Differences and recent developments
Corporate governance system in Germany and in the UK:
Anglo-American Influence
6. Corporate governance in developing countries
Where the need comes from
What to do?
General challenges
7. Conclusion
8. Appendix
Case Study: Thailand as an example for successfully adapting corporate governance systems
Research Objectives and Themes
This essay aims to explore the significance of corporate governance systems in modern economies, focusing on their role in mitigating risks associated with the separation of ownership and control. It investigates how effective governance frameworks contribute to economic stability, investor confidence, and the development of emerging markets by analyzing international standards, national variations, and the specific challenges faced by developing nations.
- The foundational role of OECD Principles in corporate governance.
- Driving forces behind the global evolution of corporate governance.
- Comparative analysis of governance systems in Germany and the UK.
- The impact of institutional frameworks on emerging and transitional economies.
- Case study analysis regarding the adaptation of governance practices in Thailand.
Excerpt from the Book
Corporate governance in developing countries
As we know, the original need for corporate governance stems from the separation of ownership and control in publicly held companies. Investors seek to invest their capital in profit-making firms so that they can enjoy these profits in the future.
Yet, the need for corporate governance in developing, emerging and transitional economies extends far beyond resolving problems stemming from the separation of ownership and control. Developing and emerging economies are constantly confronted with issues such as the lack of property rights, the abuse of minority shareholders, contract violations, asset stripping and self-dealing.
To make matters worse, these acts often go unpunished. This is because many developing, emerging and transitional economies lack the necessary political and economic institutions in order for democracy and markets to function. Without these institutions, corporate governance measures will have little impact. Hence, in the context of developing, emerging and transitional economies, instituting corporate governance entails establishing democratic, market based institutions as well as sound guidelines for how companies are run internally.
Summary of Chapters
1. Executive Summary: Provides an overview of the essay's focus on the importance of corporate governance systems and the problematic nature of weak institutional frameworks.
2. Definition of Corporate Governance: Defines the core concept of corporate governance and introduces the foundational OECD Principles.
3. Importance of Corporate Governance: Examines why corporations and nations require governance mechanisms to ensure efficiency and protect against asset misuse.
4. The Driving Forces of Corporate Governance: Analyzes the macro-environmental changes, such as shifts in the nature of work and global capital markets, that drive the interest in governance.
5. National Differences and recent developments: Compares distinct governance models, specifically contrasting the German and UK systems, while discussing Anglo-American influence.
6. Corporate governance in developing countries: Discusses the specific necessity and challenges of implementing governance structures in transitional and emerging economies.
7. Conclusion: Summarizes the necessity for robust legal enforcement and suggests that governance is critical for global economic recovery.
8. Appendix: Presents a case study on Thailand's progress in adapting corporate governance practices post-1997 crisis.
Keywords
Corporate Governance, OECD Principles, Shareholder Rights, Stakeholder Interests, Transparency, Accountability, Emerging Markets, Thailand, Corporate Law, Financial Crisis, Economic Development, Institutional Framework, Capital Markets, Management Oversight, Board Structure
Frequently Asked Questions
What is the primary focus of this essay?
The essay explores the critical role of corporate governance systems in maintaining economic efficiency, protecting stakeholders, and fostering investment, both in developed and developing contexts.
What are the central thematic fields covered?
The core themes include the definition of governance, the distinction between stakeholder and shareholder models, the macro-drivers of governance, and the institutional requirements for emerging economies.
What is the main research objective?
The objective is to reveal the broad importance of corporate governance for society and capital markets, rather than focusing on narrow legal minutiae.
Which scientific approach is utilized?
The author uses a descriptive and comparative analysis approach, drawing upon international reports, academic literature, and case studies to evaluate governance models.
What does the main body of the text cover?
It covers the definition of principles, the impact of changing organizational structures, a comparison of the UK and German systems, and a dedicated analysis of governance challenges in developing regions.
Which keywords characterize this work?
Key terms include Corporate Governance, OECD Principles, Accountability, Transparency, and Emerging Markets.
How does the author characterize the difference between the UK and German models?
The author contrasts the UK's one-tier board model with Germany's two-tier model, noting the different management and control functions inherent in each.
What does the Thailand case study demonstrate?
It illustrates how a country, forced by an economic crisis, successfully implemented governance reforms and adopted international standards to regain investor confidence.
- Quote paper
- Daniel Wülbern (Author), 2003, Corporate Governance, Munich, GRIN Verlag, https://www.grin.com/document/19735
