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3 Models of corporate governance - Coggle Diagram
3 Models of corporate governance
1. Anglo-American Model
Shareholders
Shareholders: Shareholders play a central role in this model, as it emphasizes shareholder primacy. They provide capital to the company and expect returns on their investments.
Board of Directors
The board represents shareholders' interests and oversees management's decisions. It ensures that the company operates in the shareholders' best interests.
Management
Executives and managers are responsible for implementing the board's directives and managing the company's day-to-day operations to maximize shareholder value.
Employees
Employees contribute to the company's success through their labor and expertise. However, their influence on decision-making may be limited compared to shareholders.
Suppliers/Customers
Suppliers provide goods and services necessary for the company's operations, while customers purchase the company's products or services. Their relationships with the company can impact its performance and profitability.
Government
Government regulators and policymakers may influence corporate governance through laws, regulations, and policies aimed at protecting shareholders' interests and ensuring market integrity.
The Anglo-American model emphasizes shareholder primacy and market-based mechanisms
2. Continental European Model
Shareholders
Shareholders have a voice in decision-making but share control with other stakeholders. Their interests are balanced with those of other stakeholders
Supervisory Board
The supervisory board oversees the management board and represents shareholders' interests. It may include representatives of shareholders, employees, and other stakeholders.
Management Board
The management board is responsible for the company's strategic direction and day-to-day operations, subject to oversight by the supervisory board.
Labor representatives
In many European countries, employees have representation on the supervisory board or through works councils. This ensures that their interests are considered in corporate decision-making.
Banks
Banks often play a significant role in corporate governance in Continental Europe, providing financing, strategic advice, and sometimes holding equity stakes in companies.
Government
Government involvement in corporate governance varies but may include regulations governing shareholder rights, disclosure requirements, and employee participation in decision-making.
The Continental European model emphasizes stakeholder collaboration and employee representation
3. Asian Model
Shareholders
Shareholders hold influence over the company's direction and management but may prioritize long-term stability over short-term profits.
Board of Directors
Similar to the Anglo-American model, the board represents shareholders' interests and oversees management. However, in some cases, board members may have closer ties to other stakeholders such as government or business groups.
Management
Management is responsible for implementing the board's directives and managing the company's operations. In some Asian countries, management may have closer relationships with government officials or business groups.
-Government
Government plays a significant role in Asian corporate governance, often through regulations, policies, and state-owned enterprises. Government officials may also sit on corporate boards or have close ties to business leaders.
Business groups
In many Asian countries, business groups or conglomerates wield significant influence over corporate governance. These groups often have diversified interests and may control multiple companies within various industries.
Banks
Banks in Asian countries may provide financing, strategic advice, and corporate governance oversight to companies. They may also have relationships with government officials and business groups, influencing corporate decision-making.
Employees
Customers
The Asian model often involves close relationships between corporations, government, and banks, emphasizing long-term relationships and stability
These differences in models stem from historical, institutional, and cultural contexts, reflecting varying priorities and values in corporate governance practices.