International Corporate Governance

What is corporate governance?

• Legal vs organizational corporate governance:

  • Organizational i.e. how the company is run internally.

  • Legal perspective encompasses external governance or in a way external compliance.

• Internal vs external corporate governance:

  • Legal structure within: focus is on legal entities. Outside of scope

  • External: the holding company and the shareholders.

Factors which need to considered

• Allocation of powers between board and shareholders

• Agency Cost

• Remuneration

• Takeovers

  • Role of board?

• Board primacy vs shareholder primacy

  • BP: balance between total power to board and micromanagement by shareholders

  • SP: Voting powers of the shareholders etc.

• Shareholder vs Stakeholder model

  • SHM: Shareholders interest:

    • US follows more of a shareholder model

  • STM: Interests of different stakeholders are taken into account

    • EU More of a stakeholders model