Corporate Governance Systems

Team 4 Candice Woods

Jennifer Zhang May 27, 2013

What is Corporate Governance?

The system of rules and practices that governs a firms decision making processes

Assigned Article Stakeholder rights and corporate governance:

A cross-national study of hostile takeovers

William D. Schneper

Mauro F. Guillén

What is a Hostile Takeover?

A corporate acquisition implemented either by a shareholder or stakeholder that is in contest to a firms incumbent managers

Conception

Normative

Traditional ViewpointsPower

Hostile Takeover

Hostile Takeover Occurrences

Country Financial System

Governance System

HT Attempts (1988-2003)

Germany Bank-Based Stakeholder Model

Japan 3United States Market-Based Shareholder

Model478

United Kingdom

Governance SystemsStakeholder Model

Corporate control depends on Support

Ongoing Power Struggle

Risk-averse; utilize capital

Share Price measure of Performance

Hostile Takeovers are rare

Shareholder Model Firms purpose is to

make SH’s Richer Ongoing Power

Struggle Managers vs. SH’s

Profit maximizing; high-risk

Hostile takeover is correlated with economy health and company performance

Findings Hostile Takeover increase when there are

strong SH rights and when financial institutions and workers rights are not strongly protected

Inversely correlated

Article 1

Underperformance does not motivate a hostile takeover

Narrowly defined a hostile takeover Occurs when the managers or BOD have been

replaced during hostile takeover Other wise a Synergistic Takeover

“The role of Hostile Takeovers in Corporate Governance”Rajeeva Sinha

Creative Destruction Schumpeterian process of ‘creative

destruction’ likely the cause of hostile takeovers

Hostile takeovers in Europe

Hostile takeovers occur in waves; correlated to technological advances and political/economical changes

Mechanism to adapt to external environmental changes

1990-1998 199995 127

Currently used Defense Strategies

United States Charter

amendments Litigation Poison Pill

“flip in” “flip over”

Greenmail

United Kingdom

Employed dividendsAnnounced Profits

Article 2

3 Main Stakeholders• Shareholders

• Banks

• Workers

“Stakeholder Theory: Reviewing a Theory That Moves Us” André O.Laplume, Karan Sonpar &Reginald A.Litz

“To be an effective strategist, you must deal

with those groups that

can affect you, while to

be responsive, you must

deal with those group

that you can affect.”

-Freeman

Who else can be the Stakeholders

Internal Stakeholders Owners Customers Employees Suppliers

External Stakeholders

Governments Competitors Consumer

advocates Environmentalists Special interest

groups media

How do Stakeholders Influence Firms

With direct & indirect withholding and conditional usage strategies

Influence depends on relationship structure, contractual forms, and institutional supports

Influence is determined by the power and legitimacy of a stakeholder

By forming coalitions and collaboration.

How Suppliers Influence A Firm’s Decision Making

Porter’s Five Forces Model

The Strength of Bargaining Power of Suppliers

How do firms gain stakeholder support?

By building stakeholder trust and avoiding opportunistic relationships

Maintain a good reputation Become involved in non-profit work Increase work involvement by offering an

employee stock option

Article 3 The second assigned article

“Comparative and International Corporate Governance” Ruth V. Aguilera a & Gregory Jackson

cross-country diversity in corporate governance

Correlations in Conclusion

Recall from the previous slide

Need more studies on

cultural aspects that encourages

SH vs. SKGovernance System + Cultural analysis (Hofstede)

Individualism Collectivism

Masculinity Femininity

High Uncertainty Avoidance Low Uncertainty Avoidance

High Power Distance Low Power Distance

High LTO Low LTO

References Aguilera, R. V., & Jackson, G. 2010. Comparative and

international corporate governance. Academy of Management Annals, 4(1): 485-556. doi: http://dx.doi.org/10.1080/19416520.2010.495525

Laplume, A., Sonpar, K., & Lits, R. (2008). Stakeholder Theory: Reviewing a Theory That Moves Us. Journal of Management, 34:1152. Doi: 10.1177/0149206308324322

Porter, E., M. (2008). The five competitive forces that shape strategy. Harvard Business Review. January, 2008, 79-92.

Schneper, W. D., & Guillen, M. F. 2004. Stakeholder rights and corporate governance: cross-national study of hostile takeovers. Administrative science quarterly, 49(2): 263-295. Retrieved from http://web.ebscohost.com/bsi/pdfviewer/pdfviewer?sid=a2f62067-c872-42d0-994d-e9cd09965b01%40sessionmgr115&vid=52&hid=117

Sinha, R. (2004). The role of hostile takeovers in corporate governance. Applied Financial Economics, 14(18), 1291-1305. doi:10.1080/0960310042000280492

Thank you all for listening and participating!

Corporate Governance Systems

Documents

Practical Guidelines for Corporate Governance …...Trade and Industry formulated the Practical“ Guidelines for Corporate Governance Systems” (CGS Guidelines) which contained the

Corporate Governance Report and Corporate Governance Statement€¦ · Corporate Governance Report and Corporate Governance Statement Pursuant to Section 3.10 of the German Corporate

Gloucestershire Fire and Rescue Service Corporate Governance Framework€¦ · · 2016-07-12Corporate Governance Framework. 2 | P a g e ... 4.2 Key Corporate Governance Strategies/Systems

Practical Guidelines for Corporate Governance Systems … · for Corporate Governance ... Trade and Industry formulated the “Practical Guidelines for Corporate Governance Systems

Corporate Governance Principles and Recommendations … · Corporate Governance Principles and Recommendations 3rd Edition ASX Corporate Governance Council ASX Corporate Governance

Corporate Governance Compliance and Monitoring Systems ... · Corporate Governance Compliance and Monitoring Systems across the EU ... ecoDa is grateful to Mazars and the European

STEINHOFF’S corporate governance report • STEINHOFF INTERNATIONAL • ANNUAL REPORT 2016 Corporate governance STEINHOFF’S corporate governance report “Corporate governance

MEASURING THE EFFECTIVENESS OF THE CORPORATE GOVERNANCE ... · Corporate Governance (2004) and various corporate governance indexes (i.e., Standard & Poor’s Corporate Governance

A Comparison of Corporate Governance Systems in …...1 A Comparison of Corporate Governance Systems in Four Countries Jüergen Schneider Ernst & Young Deutsche Allgemeine Treuhand

Key Systems Underpinning MOL: Corporate Governance and ... · Key Systems Underpinning MOL: Corporate Governance and Corporate Social Responsibility Contents page 50 Board of Directors,

Corporate Governance...Corporate Governance 1.Overview of corporate governance (1)Basic corporate governance principles The general principles of corporate governance at Epson are

Corporate Governance Statement / Corporate Governance Report

Corporate Governance Manual585a07a2-b124-441b-a86a-f389f2d6eefe/حوكمة...12 Principles of Good Corporate Governance Corporate Governance is a set of systems, organizational structures

Corporate Governance Report - Olam Internationalolamgroup.com/wp...Annual-Report-2014-Corporate-Governance-Report.pdfAnnual Report 2014 | 61 Corporate Governance Corporate Governance

Corporate Governance Report and Declaration on Corporate Governance · 2015-07-06 · Corporate Governance Report and Declaration on Corporate Governance ... on the Company’s corporate

Article Reflections on Corporate Governance Systems

Report on Corporate Governance - Reliance · PDF fileReport on Corporate Governance ... effective governance systems and ... Governance, a report containing the details of governance

HOW NATIONAL CORPORATE GOVERNANCE SYSTEMS AFFECT GLOBAL INTEGRATION …facultyresearch.london.edu/docs/SIM31.pdf · · 2005-08-09HOW NATIONAL CORPORATE GOVERNANCE SYSTEMS AFFECT

Harnessing Information Systems Audit towards Good Corporate Governance

Corporate Governance Report - CLP Group · Corporate Governance Report CLP’s Corporate Governance Framework Good corporate governance enhances the credibility and reputation of