Tuesday, August 30, 2005

Corporate Governance in the US and Europe: Where Are We Now? by Tom Kirchmaier, Geoffrey Owen, Jeremy Grant

SSRN-Corporate Governance in the US and Europe: Where Are We Now? by Tom Kirchmaier, Geoffrey Owen, Jeremy Grant:

This one is long but very interesting! It is really a book more than a paper.
It is "based on a conference organised by the London School of Economics and New York University, held in London on November 4th and 5th, 2004.

The conference brought together academics and practitioners from both sides of the Atlantic to review recent developments in corporate governance, focusing in particular on the lessons to be learnt from the stock market boom-and-bust and from the corporate scandals that came to light in 2001 and 2002."
It contains many interesting insights!

A very quick "look about":
* "Why is corporate governance important? Corporate governance can be defined as
the set of control mechanisms and institutions which protect the suppliers of capital to a company, particularly suppliers of equity capital, the shareholders, who have only residual protection after all other claimants have been satisfied. Product market competition provides an incentive for managers to deploy capital efficiently, but only effective corporate governance can ensure that interests of shareholders are protected."

* "In Europe, and to a lesser extent in Japan, additional pressure to make these changes came from the growing influence of American institutional investors as shareholders in European companies. Then came the stock market crash, followed by Enron, WorldCom and other corporate scandals. The US model of corporate governance lost much of its appeal, especially in those Continental countries where the concept of shareholder value maximisation did not fit easily with long-established habits and attitudes."

* "Comparisons are often made between Anglo-American capitalism and the rest,
and it is true that the US and the UK do share some common features which distinguish them from most Continental European countries and Japan. But such generalisations obscure important differences on both sides of the divide. For example, British institutional investors tend to be more interventionist than their American counterparts."
Fascinating material done well! Definitely I^3!

Kirchmaier, Tom, Owen, Geoffrey and Grant, Jeremy, "Corporate Governance in the US and Europe: Where Are We Now?" (April 2005). http://ssrn.com/abstract=708461

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