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Abstract

Pundits of globalization predict the eventual demise of the stakeholder corporate governance model found in Europe and Japan and its replacement by the Anglo-American shareholder model. Were this to occur, it would sharply change the relationship of employees to their employer in many parts of the world. Yet it's not obvious that convergence is inevitable. There is considerable inertia and persistence of national governance models due to factors such as path dependence, bounded rationality, uncertain macroeconomic benefits, and weak globalization pressures. Moreover, while one can find evidence of institutional diffusion across borders, it occurs in multiple directions; not all roads lead to Wall Street.
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... According to Hansmann and Kraakman (2000), convergence towards the shareholder model is a natural consequence of these important phenomena that characterize and influence the world. On the other hand, for Jacoby (2000) convergence is still far off, and perhaps it will never be achieved. In fact, Bebchuk and Roe (1999) and Salacuse (2002a) argue that a system of corporate governance contains the values, tradition, the history and the culture of a society, all of which tend to impede change and convergence towards a new system. ...
... Again, the pressure from the financial markets, globalization and the growth of successful multinational firms has pushed the global corporate governance systems towards the shareholder oriented model (Palmer, 2011;Branson, 2001). Furthermore, the companies and the systems that failed to conform to the Anglo-Saxon model has been under attack (Jacoby, 2000). Thus, there has been a more or less clear tendency of a convergence towards the Anglo-Saxon system (Siems, 2010), but for many authors this convergence is still far off, and maybe it never will be achieved (Palmer, 2011;Jacoby, 2000;Clarke, 2016;Otten et al., 2006), especially after the last financial crisis (Siems, 2010). ...
... Furthermore, the companies and the systems that failed to conform to the Anglo-Saxon model has been under attack (Jacoby, 2000). Thus, there has been a more or less clear tendency of a convergence towards the Anglo-Saxon system (Siems, 2010), but for many authors this convergence is still far off, and maybe it never will be achieved (Palmer, 2011;Jacoby, 2000;Clarke, 2016;Otten et al., 2006), especially after the last financial crisis (Siems, 2010). For many other authors the convergence is not towards the shareholder oriented model but it will be towards a hybrid model that will take elements from both the main models (Aguilera and Jackson, 2010;Siems, 2010). ...
Thesis
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The two main models of corporate governance originated in the second part of the 20th century: the shareholder model, in the Anglo-Saxon world, and the stakeholder model, in Continental Europe. They are respectively mainly characterized by widespread and concentrated ownership and, consequently, by different agency problems. However, with the phenomenon of globalisation, the increased importance of financial markets and the international success of Anglo-American multinational firms, a debate has arisen as to whether there exists a convergence towards the shareholder oriented model. This research aims to explore this controversy by focusing the analysis on the ownership structure of the blue chip firms in the main stock indexes of Germany, France, Italy, Spain and the UK. The research concludes that a convergence in corporate governance structure towards the shareholder model seems to exist in almost all of those countries.
... The breakthrough year for the Japanese economy and corporate governance was 1997, when the government announced the Big Bang reform focused on deregulation and internationalization of the economy and construction of a free, fair, open, competitive capital market policy (Jacoby, 2002;Kuepper, 2017). It initiated the implementation of the Plan for Strengthening the Comprehensiveness of Japan's Financial and Capital Markets, which was aimed at increasing Japan's competitiveness on the international scale. ...
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ABSTRACT The aim of the paper is to indicate that hybridization is a process that has been going on for decades in Japan, contributing to the improvement of Japanese corporate governance, and that the regulations regarding board of directors are a good example of the hybridization process. To achieve that aim the changes of corporate governance system and their determinants are pointed out. The three main waves of hybridization of Japanese regulations and corporate governance are characterized. Then, the three functioning structures of Japanese boards will be summarized underlining their strong and weak points. The Company with statutory auditors (Company with Kansayaku Board), a company with Three Committees - nomination, audit, and remuneration, and a company with an Audit and Supervisory Committee will be presented as evidence of the hybridization process. The paper tries to answer the research question - why hybridization rather than convergence is used to improve Japanese corporate governance. The work mainly uses the method of critical analysis of the subject sources of literature, legal acts and corporate governance regulations. The article should contribute to reducing the research gap existing in Polish literature in the field of Japanese corporate governance, especially with respect to the Japanese boards. Keywords: corporate governance, systems, board of directors, board of statutory auditors. JEL classification codes: G30, G34, G38, K20, M14
... In Japan, most large corporations have company unions and joint commission with access to management. There is also a managerial principle that employees are a significant company group among the stakeholders, and the management's duty is to reconcile between shareholders, employees and the rest of the stakeholders (Jacoby, 2001). ...
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This study explains the main corporate governance models used in the United States of America, United Kingdom, Germany and Japan by analyzing their similarities, differences, strengths and weaknesses. In addition, the possibility of future convergence between these models is discussed. Two types of corporate governance models are used in the world: Shareholder and Stakeholder models. In this study, USA, and UK will be analyzed as an example of the shareholder model, whereas Germany and Japan will be discussed as an example of the stakeholder model. The shareholder model emphasizes the benefits of shareholders and the management dominates the decision-making procedure of the companies. The stakeholder model, on the other hand, puts more emphasis on the interests of stakeholders or capital market players such as the workers, suppliers and the public. On the convergence debate, four different arguments are identified: The first and the main one is against convergence seeing it as a distant dream because of the differences between the countries. The second argument supports and expects convergence in the near future. The third argument supports the argument of functional convergence rather than formal convergence. The fourth argument supports the combination of both shareholder and stakeholder models to get effective corporate governance practices.This research supports the first argument which is against convergence, because looking at the differences between the countries in their economic, legal and political frameworks, it is still impossible to suggest convergence. Each country will continue to adopt its style according to its culture and also according to its differing needs.
... One important stream of literature argues that increasing assets values on financial markets during the 1990s drove firms to seek listings on US exchanges and consequently caused those firms to adopt US corporate practice (Nakamura, 2010). In this stream, the mechanism of convergence on an Anglo-American system is economic gain (Hansmann and Kraakman, 2001;Jacoby, 2002). Recent studies found a link between a firms value using the Institutional Shareholder Services database to score firms with seven dimensions of corporate governance centered on the Anglo-US model and found valuation positively related to score (Brown and Caylor, 2006). ...
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This paper aims to present evidence that the adoption by Japanese firms of a shareholder-oriented, more transparent, system of corporate governance creates greater corporate value in comparison to the traditional system of statutory auditors. This study uses panel data of Tokyo Stock Exchange listed companies to explore the potential convergence of corporate governance systems by examining the value differences between Japanese firms selecting one of two legal systems. A random-effects panel regression is used to analyze the data. The dependent variable of the study is Tobin's q. This paper finds a significant increase in firm valuation, as measured by Tobin's q, for companies that adopted the alternative of the Anglo-American type committee system, even though comparative financial data show little difference in performance after adoption. This finding is attributed to signal sending, as companies that adopted this system signal a choice toward transparency via monitoring by outsiders, suggesting a reduction of asymmetric agency costs. The paper finds that the committee corporate governance system produces higher corporate value than the traditional auditor governance. The study also finds evidence that it is the signal provided by adoption of the credible system, not the financial performance variables, that accounts for this difference. The data support the central idea that corporate governance laws have consequences and encourages additional study of the effects of corporate signaling and the consequences of increased shareholder orientation of agents. This paper takes advantage of the unique opportunity afforded by Japan's introduction of a dual system of corporate governance in 2003, when companies were offered a choice to adopt a new system of outside directors, which is a shareholder-oriented committee system. It establishes that firm value can be created by a signal that corporate governance provides.
... 1 theoretical approaches, centred on predominantly descriptive analysis (Carati and Rad, 2000;Jacoby, 2002;Plihon et al., 2002;Jackson, 2002, 2003;Jeffers, 2005;Horn, 2012), aiming the development of a model for the issue (Zingales, 1997;Lombardo and Pagano, 2002;Enriques and Volpin, 2007) 2 empirical approaches, which integrate in the generally multidisciplinary methodology various quantitative observations recorded along variable length periods of time (for example Bebchuck and Roe, 1999;O'Sullivan, 2000O'Sullivan, , 2003Coffee, 2000Coffee, , 2001Gilson, 2001;Guillen, 2000;Boutillier et al., 2002;Gugler et al., 2004) 3 approaches more centred on the statistical and econometric analysis of relevant data (La Porta et al., 1997, 1998Khanna et al., 2006;Wójcik, 2006). ...
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Chapter
In Chapter 2, we discussed corporate governance in theory and in practice in the United States. In essence, the shareholder approach is utilized in most corporate settings, that is, the belief in most boardrooms that the major, if not exclusive, duty of a corporation is to maximize the profits for its shareholders. We have seen that the theory is undergoing fundamental changes due to recent legislative enactments, especially the Dodd-Frank Act, and the rise in influence of large institutional investors. In this chapter, we will review types of stakeholder models that are applied in non-U.S. corporate settings.
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Chapter
Governance in the firm is a mechanism to help empowered claimants protect their interests, principally by giving them “voice” in corporate decisions. Germany and some other European countries have explicitly mandated a formal role for employees in corporate governance, whereas the “Anglo-Saxon” systems of the United States and United Kingdom have basically restricted governance to representatives of the providers of financial capital. The recent relative success of the American economy — transforming itself in the 1980s and achieving low unemployment and sustained growth since then — has raised the question whether shareholder value should also become the over-riding objective of European (and Japanese) business. At the same time, the purportedly increasing importance of knoweledge and human capital might suggest that the provides of this capital shouls be accorded more representation in governance processes: they are providing more of the total capital and these investments may need protection. Note that, in fact, in professional service firms, where the only important capital is human, the full powers of ownership are in the hands of providers of this human capital. More generally, employee stock holdings are often significant in human capital-intensive corporations. In this paper we discuss these matters in light of a series of comparative statics exercises that examine the effect of increasing the ralative importance of human capital on the optimal role of workers in governance. We find support for the position expressed in the preceding paragraph. We also find that the attractiveness of shareholder-dominated governance when significant reallocations of capital are indicated depends on the extent that workers’ interests are protected by outside employment options (“exit”) and on the possibilities that they have to use value-destroying bargaining devices such as strikes to promote their interests.
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