BUS 430 – Session 2Cross-cultural Management

Session 2: Corporate Governance Systems

Agenda

0Reallocation of teams0Critical reflection #10Discussion#10Critical reflection #20Discussion#20Corporate Governance Systems

Comparative and International Corporate Governance - Aguilera and Jackson (2010)

0What is corporate governance?0 “Corporate governance may be defined broadly as the

study of power and influence over decision making within the corporation”

0How could it be compared?0 Economic and managerial0 Cultural and sociological0 Legal origin0 Political

Economic and managerial

0Shareholder primacy and agency concerns0 Role of board of directors

0Stakeholder based models0 Role of banks and unions

0Property rights perspective0 Role of property rights institutions

Cultural and sociological perspective

0Cultural differences and different governance styles0 Hofstede’s influence0 Cultural differences in accounting practices (discolsure)0 Cultural differences in managerial discretion0 Cultural differences in financial behavior (leverage etc)0 Meritocracy vs. network based management0 Type of employment norms (long term vs. hire and fire)

Legal origins perspective

0Legal origin – i.e., colonial roots0Endogeniety of legal systems on political history

0 Investor protection0 Property rights protection0 Minority vs. majority interests protection

0 Legal basis of whom the firm should stand for

Political perspective

0Political coalitions0 Lobbying0 Coalition formation0 Campaign contributions

0Partisan politics0 Median voter dictates policies0 Election based policies (Worker based vs corporation

based policies)

Hostile takeovers and corporate governance - Schneper & Guillén (2004)

0Market for corporate control

0Hostile takeovers discipline inefficient managers

0But hostile takeovers come with a price0 Compromise stakeholder interests

Cross-national differences in stakeholder protection

1) Greater the protection of shareholder rights => greater the occurrence of hostile takeovers

2) Greater the protection of worker rights => lesser the occurrence of hostile takeovers

3) Greater the protection to bank’s rights => lesser the occurrence of hostile takeovers

That’s is for today

0For our next session we will examine: NATIONAL INNOVATION SYSTEMS