International Corporate Governance Flashcards
1
Q
What factors influence global variability in CG systems?
A
- Culture
- Economy
- Legal factors
2
Q
What are the two types of CG system?
A
- Insider-oriented
- Outsider-oriented
3
Q
Insider-Oriented CG Systems?
A
- Common in countries like Italy
- Corporate control is often concentrated in the hands of a few (families or large shareholders)
- Leads to a relationship-based governance model
4
Q
Outsider-Oriented CG Systems?
A
- Typical in Anglo-American contexts
- Characterized by dispersed ownership and a reliance on capital markets for corporate control
5
Q
Characteristics of Insider CG systems?
A
- Emphasize strong ties, stable ownership, long-term relationships
- At the cost of transparency and minority shareholder protection
6
Q
Characteristics of Outsider CG systems?
A
- Focus on market mechanisms for corporate control, transparency and shareholder value
7
Q
Examples of influence of legal systems on CG?
A
- Common Law Systems: (e.g. USA, UK) Offer greater protection for shareholders and are associated with larger, more liquid capital markets.
- Civil Law systems: (e.g. France, Italy) Generally provide less protection for shareholders, leading to more concentrated ownership.
8
Q
What does La Porta et al. highlight?
A
That countries with stronger investor protections tend to develop more robust capital markets.
9
Q
Italy and CG Evolution?
A
- Noted for its insider system where legal protection for minority shareholders has historically been weak, leading to concentrated ownership and lesser developed capital market.
- Draghi Reform: Aimed to improve financial market regulation and corporate governance.
10
Q
South Africa and CG evolution?
A
- Known for the King Reports: Have continually evolved to incorporate broader governance issues like sustainability and integrated reporting.
- King Reports reflect holistic approach to governance that extends beyond traditional financial metrics, emphasizing sustainability, leadership and corporate citizenship.
