“Models of Corporate Governance: Who’s the Fairest of Them All”
Case Study Review

Corporate governance systems vary around the world. Some focus on a link between the shareholder and the company, others on board structures and practices, and some on social responsibilities of a company. The main idea of corporate governance is a set of mechanisms used to manage the relationships and interests among stakeholders, and to determine a corporations direction and performance by aligning strategic decisions with company values. If CEO’s are motivated to act in the best interest of the company and shareholders, their value typically increases. Increasing value creates a competitive advantage and this is why corporate governance is so vital to firms. This case looks at different models of corporate governance from across the world and how their characteristics distinguish them from each other. The Anglo-Saxon model is used as a basis by the United States with the U.K. sharing a lot of similarities. Some characteristics of this model are:
The firm’s shareholders, who provide capital and must approve major transactions. They appoint directors who then appoint managers to manage the business. This creates a separation of ownership and control.
The firm’s board of directors, who are elected by shareholders to oversee the management of the corporation. This board usually consists of executive directors and a few independent directors. The board has a limited ownership stake in the company.
The firms’ senior executives who are responsible for the day to day operations.
This model relies on communication between the shareholders, board and management with all important decisions taken after approval by vote from the shareholders.

Germany’s model is a two-tiered board structure, a supervisory board and management board. Some of their characteristics include:
A large majority of shareholders are banks and financial insititutions.
A shareholder can appoint 50% of members to constitute