The Anglo-American Model Of Corporate Structure

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As discussed above, the two-tiered board of directors is used in the corporate governance mechanisms in Germany and Japan, which is praised as effective for the shareholders and also for relevant stakeholders. The Anglo-American model of board structure, including institutional and market-based holders, is intended to bring in the self-interested controllers aiming at making the decisions that maximize the value of the owners (Dennis and McConnell 2003). The essentially one-tier board in Chinese listed firms has a so-called supervisory board. Each of the corporate governance models reflects a structure in which to manage the agency problems arising when managers or relevant stakeholders are delegated rights of control. Each implies the ideal …show more content…

Berle and Means (1932) the corporatization reforms result in the transformation of control rights from individual to professional managers. The separation of ownership and control brings about the root of the agency problems, conflicts of interests among different parties. Additionally according to Shleifer and Vishny (1997), it can be more generally stated that the essence of agency problem comes from the separation of management and finance. The funds raised from investors can be used to invest in further production or cash out of the firms` holdings. Sometimes due to the lack or insufficiency of owners` fund and resources, managers need additional funds from investors to support investment opportunities or meet the financial obligations of the firms. Accordingly investors have high request and expectation on management team to operate the firms better and thus generate returns on their investment. The agency problem has become a wide concern among the listed firms and Chinese stock market. They are keep seeking corporate governance incentive mechanisms which can help to align the different interests between owners and managers, and monitoring mechanisms that can provide prevention or assurances that the funds and resources in the firms would not be expropriated or

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