圣女的祈祷-Capstone Assignment

Capstone Assignment

Background Information:
In general, two main systems or models of governance had been identified and analyzed in the literature. The first is the “outsider system”, “market-based system” or “shareholder model”, which has been adopted in the U.K. and U.S. The second is the “insider system”, “long-term large investor system” or “stakeholder model” that has been employed by firms in continent Europe and Japan, among others. Detailed surveys of these models are available in Becht, Bolton and Roell (2005), Bouy (2005), Jansson (2005) and Murphy and Topyan (2005), whose propositions are summarized below.
The primary objective of the firm in the U.K. and U.S. is to maximize profit, and performance is appreciated by the market value of the firm. The principal-agent relationship arising from the separation of ownership and decision-making may cause the firm’s behavior to diverge from the profit-maximizing ideal; since the managers are not the owners of the firm, they can have other objectives rather than maximizing the shareholder wealth. An effective corporate governance framework is needed to minimize agency costs.
In an outsider system equities represent a large proportion of financial assets and GDP, and there are developed investment banking and securities markets. The stock market may be dominated by institutional investors, due to the tax incentives to collective schemes, growth of mutual funds, and tendency for firms to issue shares directly to institutional investors; institutional investors may have incentives to monitor management and serve as a control mechanism.
The outsider systems in the U.K. and U.S. are also characterized by widely dispersed share ownership and high turnover. As the power of shareholders to select directors and vote on key issues of the company is limited by the fragmentation of ownership, regulation bodies have to offer adequate shareholder protection and allow investors to assume the risk-reward trade-off with an equal access to information. Consequently the main concern of corporate governance is the conflict between strong managers and weak dispersed shareholders, and in this spirit the role of directors, stock options, takeovers, minority shareholder protection are frequently investigated by researchers.
As the board of directors is responsible for monitoring managerial performance and preventing conflicts of interests, it must have some degrees of independence from management; however, board independence often poses a problem in reality and the board is regarded as a relatively weak governance device. It is the capital markets that play a primary role in corporate governance. When managers fail to maximize the firm’s value, they expose it to the treat of a take-over; the market for corporate control may be a more effective disciplinary device than either the monitoring by institutional investors or board of directors. Thus this model is termed as the “market-based” or “market-oriented” system in Becht et al (2005) and Murphy and Topyan (2005); the intensity of mergers and acquisitions in the U.K and U.S. could be justified by rent seeking behavior, empire building and tax minimization.
In an insider system or stakeholder model such as continental Europe and Japan, corporate ownership is typically concentrated among a stable network of strategically oriented banks and firms, rather than fragmented among individuals and financial-oriented institutional investors; the market for corporate control is largely non-existent.
Instead, banks play the central external governance role through relational financing, commingling debt and equity, providing financial services and monitoring in times of financial distress. Corporations must fulfill wider objectives and have responsibilities to parties other than shareholders; the “best” firms are the ones with committed suppliers, customers and employees, with corporate governance “coalitions” built among banks, long-term investors, employees and management.
Employees could exercise voice within corporate governance, for example, through legal rights to co-determination in Germany or extensive use of joint labor-management consultation in Japan; this role of employees is reflected in long employment tenures, infrequent use of lay-offs and high investment in firm-specific skills. Top managers tend to be internally promoted, and managerial compensation is much closer to average employees’ schemes and lack of strong shareholder-oriented incentives such as stock options; as a result managers are supposed to be less finance-oriented and focus on long-term product strategy.
Bouy (2005, p.39) suggested that, for the stakeholder model, “the basic conflict is between ‘strong voting blockholders, weak minority owners’ or ‘weak managers, weak minority owners, strong majority owners’”; although there is little empirical evidence to support this insight.
Requirements:
• Discuss how the legal, political, economic, social and cultural traditions in Australia have impacted upon the development of corporate governance best practice for listed companies.
• It appears that Australia is in the process of reforming its corporate governance based on an assumption that it is an outsider model. Consider whether, in your opinion, the assumption is correct.
OR
• Discuss how the legal, political, economic, social and cultural traditions in China have impacted upon the development of corporate governance best practice for listed companies.
• It appears that China is in the process of reforming its corporate governance based on an assumption that it is an outsider model. Consider whether, in your opinion, the assumption is correct.
Capstone Assignment is designed to allow you to develop skills and experience in applying the knowledge and understanding of corporate governance best practice that you have gained from undertaking Modules 1 - 6.
The Assignment addresses Outcomes 2a, 2b, 2c, 2d and 2e in the Learning Outcomes for the Unit. By the time you complete this Assignment, your knowledge and understanding of corporate governance will have been strengthened and expanded and you will have developed skills and experience in applying what you have learnt about the implementation of corporate governance best practices in Australia and China.
Assessment Criteria:
• Demonstrated knowledge and understanding of corporate governance best practices for listed companies in Australia and China.
• Demonstrated knowledge and understanding of the legal, political, economic, social and cultural traditions and their impact upon the development of corporate governance best practices in Australia and China.
• Demonstrated ability to identify, evaluate and explain the basic assumption of the current corporate governance reforms in Australia and China.
• Demonstrated competence in presenting answers and arguments coherently and concisely.
References:
Becht, M., Bolton, P. and Roell, A, 2005. Corporate Governance and Control. Working Paper. http://www.ssrn.com.
Bouy, C, 2005. On Corporate Governance, Management and Entrepreneurship in OECD Countries. Corporate Governance & Control 2(3): 36-50.
Jansson, E, 2005. The Stakeholder Model: The Influence of the Ownership and Governance Structures. Journal of Business Ethics 56: 1-13.
Murphy, A. and Topyan, K, 2005. Corporate Governance: A Critical Survey of Key Concepts, Issues, and Recent Reforms in the U.S. Employee Responsibilities and Rights Journal 17(2): 75-89.

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圣女的祈祷

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2007-6-4 8:13:58

Capstone Assignment

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