Session 8: Models of CG & the German CG-Code

Question 1

Context and culture

Answer 1

Context and culture affect corporate governance:
• Markets for corporate control
• Cultural influences on corporate governance

Question 2

In finance markets that are large, liquid, and with high turnover listed companies face

Answer 2

• Chancen der feindlichen Übernahme

- Verbreitete Fusionen und Übernahmen

Question 3

In finance markets that are small, illiquid with low turnover,

Answer 3

the market for corporate control will be weaker, and merger and acquisition activity infrequent.

Question 4

Corporate governance: convergence

Answer 4

• CG codes of good practice around the world
• securities regulators
• international accounting standards

Question 5

Corporate governance: differentiation

Answer 5

• cultural differences
• differences in the market for control
• differences in ownership structures

Question 6

Goals of the German CG-code

Answer 6

• Documentation of German governance guidelines
• Norms and values for responsible CG
• Creation of transparency

Question 7

Types of regulation

Answer 7

• legal regulations
• recommendations
• suggestions

Question 8

Structure

Answer 8

1. Foreword
2. Shareholders and the General Meeting
3. Management board
4. Supervisory board
5. Transparency
6. Reporting and Audit of the Annual Financial Statements

Question 9

Aktiengesetz § 161

Answer 9

Aktiengesetz
§ 161 Erklärung zum Corporate Governance Kodex

• Vorstand und Aufsichtsrat der börsennotierten Gesellschaft erklären jährlich, ob Corporate Governance Kodex“ entsprochen wurde

Question 10

Paper v. Werder/Talaulicar/Kolat

Answer 10

• Findings: Indicate a significant high level of Code conformity wich can be expacted to increase in the future.
• Acceptance increases with the size of the company.
• Stock-market listed companies show higher levels of compliance.

Question 11

The American Rule-Based Model

Answer 11

• Companies Incorporated by states
• Investors Protection federal by SEC
• Generally accepted accounting principles GAAP rule based

Question 12

The Continental European two tier Model

Answer 12

• Companies incorporated at country level
• Company law based on rule based civil law
• Governance rooted in the law
• International accounting standards IAS