Corporate Governance in Argentina

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Corporate Governance in
Emerging Economies
The case of Argentina

Content

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1. Introduction

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2. Corporate Governance

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3. Corporate Governance in developed economies
3.1 Corporate governance in the Netherlands
3.2 Globalization & Corporate Governance

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4. Corporate Governance in Argentina

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5. Practical comparison
5.1 The financial sector
5.2 The energy sector

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6. Conclusion

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7. References

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8. Appendix
8.1 Management structure ING
8.2 Corporate structure Grupo Financiero Galicia

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1. Introduction
Corporate governance has in the last decade taken a more central position in business practices worldwide. Most countries have developed a law, or code of conduct on corporate governance, in the last ten years, in order to increase transparency, trust and performance of the firm. The necessity of corporate governance is shown by accounting scandals, violation of laws and the large risks taken by large firms. Failing corporate governance practices are, by various researchers, identified as the reason of the ongoing current economic crisis (Weitzner & Peridis, 2011; Daniel, Cieslewicz & Pourjalali, 2012). The Netherlands is used as an exemplifying country for the Western, developed world in this paper, because various reasons. The Netherlands have dealt with large accounting scandals in two of their biggest companies, Royal Ahold N.V. and Royal Dutch Shell, which led to the incorporation of a new Corporate Governance Code, the Tabaksblat Code (Schnyder, 2012). The Netherlands are economically very developed, but also suffer from the crisis. Moreover, Dutch institutions are considered to be strong, which should mean that corporate governance practices in the Netherlands follow the rules and are transparent. Argentina on the other hand, is by some considered to be an emerging economy, which means that the importance of good corporate governance is increasing. However, others believe Argentina is not an emerging economy, but only appears to be because of fraud and accounting freedom on national scale. This increases the importance to investigate the corporate governance practices in Argentina, on the one hand because of the increasing global trade and investors, and on the other hand to see if companies are actually involved in the accounting scandals the country is held for.

This paper will study how corporate governance in shaped in the Netherlands and Argentina, and make a comparison between those two countries on corporate governance practices. The following research question was developed for this paper: “Are corporate governance practices in Argentina converging towards those in Western countries, such as the Netherlands, and why (not)?”. This introduction serves as part 1 of our paper. Part 2 will give a definition of the concept of corporate governance, and identify its link with firm performance. Theoretical background on corporate governance in the Netherlands is given in part 3, where the influence of globalization on corporate governance will also be discussed. Theoretical background on corporate governance in Argentina will be given in part 4. In part 5 two industries, the financial and the energy sector, will count for a case-study. Firms from the Netherlands and Argentina in

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both sectors will be compared on their corporate governance practices. A conclusion on the corporate governance practices will be given in part 6, where we will also answer the research question.

2. Corporate Governance
Corporate governance is the system used to control and direct a company. It determines the rights and responsibilities among actors and lays down the rules and procedures for decision-making (Luo, 2005). It exists to make sure all stakeholders are informed about the firm’s value, and to make sure investors will get return on their investment (Love, 2011). In terms of internationalization, it can be defined as the set of...
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