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Models of Corporate Governance, Differences of the 3 models, (https://www…
Models of Corporate Governance
1. Anglo American Model - Shareholder Model
Stakeholders in control
Board of directors and shareholders
Stakeholders with no control
Vendors and employees
shareholders provide the company with funds and may withdraw that support if dissatisfied -The board will usually consist of both insiders and independent members. Board chairperson and CEO must be separate individuals
2. Continental Model
Stakeholders with controlling authority
-Supervisory board and the management board
management board is composed of company insiders, such as its executives
supervisory board is made up of outsiders, such as shareholders and union representatives
Banks with stakes in a company also could have representatives on the supervisory board.
The two boards remain entirely separate.
-The size of the supervisory board is determined by a country's laws and can't be changed by shareholders
3. Japanese Model
Key Players -establish and control corporate governance.
• Banks
• Affiliated entities
• Management
• The government
• Major shareholders, known as Keiretsu, who may be invested in common companies or have trading relationships
The board of directors is made up of insiders, including company executives. Keiretsu may remove directors from the board if profits wane. The government affects the activities of corporate management via its regulations and policies.
Differences of the 3 models
Continental Model
- greatly values the engagement of stakeholders, as they can support and strengthen a company's continued operations.
Japanese Model
- corporate transparency is less likely because of the concentration of power and the focus on the interests of those with that power.
Shareholder Model
-The success of this corporate governance model depends on ongoing communications among the board, company management, and shareholders. Important issues are brought to shareholders' attention. Important decisions that need to be made are put to shareholders for a vote.
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https://www.investopedia.com/terms/c/corporategovernance.asp#toc-corporate-governance-models
)