Shareholder Model

Only available on StudyMode
  • Download(s) : 55
  • Published : March 5, 2013
Open Document
Text Preview
CORPORATE GOVERNANCE:
EFFECTS ON FIRM PERFORMANCE AND
ECONOMIC GROWTH
by
Maria Maher and Thomas Andersson
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
© OECD 19992
CORPORATE GOVERNANCE:
EFFECTS ON FIRM PERFORMANCE AND ECONOMIC GROWTH
TABLE OF CONTENTS
SUMMARY.................................................................................................................................................... 3 I. Introduction.......................................................................................................................................... 4 II. Analytical Framework: The Shareholder and Stakeholders Models of Governance........................... 5 II.1 The Shareholder Model ................................................................................................................ 6 II.2 The Stakeholder Model ................................................................................................................ 8 II.3 The Interaction of Corporate Governance with the Institutional and Economic Framework..... 10 III. Corporate Governance in OECD Countries: Strengths, Weaknesses, and Economic Implications12 III.1 Outsider Systems of Corporate Governance .............................................................................. 17 III.2 Insider Systems of Corporate Governance ................................................................................. 24 III.3 A Convergence in Systems?....................................................................................................... 30 IV. Corporate Governance and Performance: The Empirical Evidence............................................... 31 IV.1 Ownership concentration and firm performance ........................................................................ 31 IV.2 Dominant shareholders and the expropriation of minority shareholders.................................... 34 IV.3 The market for corporate control and firm performance............................................................ 37 IV.4 Managerial compensation and firm performance....................................................................... 41 V. Conclusions........................................................................................................................................ 44 BIBLIOGRAPHY......................................................................................................................................... 463 CORPORATE GOVERNANCE:

EFFECTS ON FIRM PERFORMANCE AND ECONOMIC GROWTH1
SUMMARY
1. This document addresses corporate governance and its effect on corporate performance and economic performance. It first recapitulates and builds on previous work undertaken by DSTI, for example, it gives a more explicit exposition of the shareholder and stakeholder models of corporate governance. It then goes on to address some of the underlying factors that promote efficient corporate governance, and examines some of the strengths, weaknesses, and economic implications associated with various corporate governance systems. In addition to providing data not presented in the previous work, it also provides newly available information on ownership concentration and voting rights in a number of OECD countries. The document also provides a survey of empirical evidence on the link between corporate governance, firm performance and economic growth. Finally, several policy implications are identified.

2. One of the most striking differences between countries’ corporate governance systems is the difference in the ownership and control of firms that exist across countries. Systems of corporate governance can be distinguished according to the degree of ownership and control and the identity of controlling shareholders. While some systems are characterised by wide dispersed ownership (outsider systems), others tend to be characterised by concentrated ownership or control (insider systems). In outsider systems of...
tracking img