Lecture 7

Question 1

Corporate Governance

Answer 1

The study of power and influence over decision making within the corporation

Question 2

Comparative corporate governance

Answer 2

The study of relationships between parties with a stake in the firm
and how their influence on strategic corporate decision making is shaped by institutions in different countries

Question 3

Scholars have approached the subject of corporate governance from which perspectives:

Answer 3

1. Economics & Management
2. Law
3. Political science
4. Culture
5. Sociology

Question 4

Agency perspective

Answer 4

Corporate governance is about how investors assure themselves of getting a return on their investment.

Question 5

“Team production” view / Stakeholder theory

Answer 5

The company has a number of stakeholders who invest firm-specific resources, but jointly give away the control over those resources to a board of directors FOR THE BENEFIT of not having to coordinate the efforts within the team.

Question 6

Characteristics Anglo-American corporate governance system

Answer 6

1. Short-term equity finance
2. Distributed ownership
3. Strong shareholder rights
4. Active markets for capital control
5. Flexible labor markets

Question 7

Characteristics European / Rhineland corporate governance system

Answer 7

1. Long-term debt financing
2. Concentrated blockholder ownership (individual or organization has substantial amount of shares.)
3. Weak shareholder rights
4. Inactive markets for capital control
5. Stiff labor markets

Question 8

Governance structure Anglo-Saxon

Answer 8

Unitary board: Board of Directors

Question 9

Governance structure Rhineland

Answer 9

Dual board: Supervisory Board & Management Board