International Perspective to Corporate Governance

8/2/2019 International Perspective to Corporate Governance

1/18

International Perspective to

Corporate Governance


2/18

Introduction

Concept of the borderless corporation.

International marketplace creates very specific

complications.

Corporations and their structure are unique to

the countries in which they are situated.

Unique political (e.g. corruption in India) andsocial landscapes (e.g. India has family run

businesses)

2


3/18


4/18

Corporations Around the World

Stakeholder model- United Kingdom and

Japan, the interests of the employees,

partners, consumers, and general public are

also considered, to varying degrees.

Family model- East Asian and Latin American

countries, place priority on family interests.

4


5/18

International Corporations

Inexpensive labor and lower tax rates- draw

company activities away from developed

countries and into emerging nations.

e.g. Nike does manufacturing Asia, including

Indonesia, China, Taiwan, India, Thailand,

Vietnam, Pakistan, Philippines, and Malaysia.

5


6/18

Accusation of Ill Treatment of

Employees

Lawsuit, filed in San Francisco superior court.

Accused Nike of violating California's

consumer laws by willfully misleading the

public about working conditions of the

Vietnamese, Chinese and Indonesian laborers

producing Nike shoes.

Asian sweatshop workers are regularly subject

to physical punishment.

6


7/18

Accusation of Ill Treatment of

Employees

Nike factory workers exposed to dangerous

chemicals, forced to work overtime,

sometimes without pay, and often unable to

earn a living wage.

Child labor.

Using deception for profit.

Settled the case for $1.5 million.

7


8/18

Companies Accused of Child Labor

Nike- Vietnam, China, Indonesia.

Coca Cola- El Salvador.

Apple- China. Zara- Brazil.

8


9/18

Companies Accused of Child Labor

Indian company fired by the clothing retailer,

Gap Inc.

Reports of child labor.

Subcontractor fired.

9


10/18


Manipulate their international standing to

avoid penalties, labor codes, and

environmental regulations.

Increasing revenue by limiting expenditures.

10


11/18


Differences in laws and customs.

Hinder a corporations ability to apply one

uniform set of Corporate Governance policies

to all of its subsidiaries.

11


12/18

Global Investors

When a corporation of one nation lists itself

on the market of another nation, it is referred

to as a foreign issuer.

12


13/18

Classifications

1. American Depositary Receipts- a foreign stock

that trades on one of the U.S. exchanges.

2. Global Depositary Receipts- a certificate

issued by a depository bank, which purchases

shares of foreign companies and deposits it on

the account.

13


14/18

Global Corporate Governance Forum

This forums general mission also includes

efforts to educate the international market on

the importance of good Corporate

Governance.

14


15/18

International Efforts to Create

Good Corporate Governance Policies

Organizations responsible for the

establishment of universal Corporate

Governance principles:

Organization for Economic Co-operation and

Development

International Corporate Governance Network

Commonwealth Association for Corporate

Governance

15


16/18

Organization for Economic Co-

operation and Development

Working with its member countries and those

outside of its membership to help establish

the groundwork for national Corporate

Governance standards.

16


17/18

International Corporate Governance

Network

Working with investors to increase education

efforts and establish Corporate Governance

guidelines across international borders.

17


18/18

Commonwealth Association for

Corporate Governance

Working primarily with African nations to

promote the development of good Corporate

Governance practices for corporations within

the continent.

18

Documents

International Perspective to Corporate Governance