FINS3626 Lecture Notes - Lecture 1: Use Case, Good Governance, Investor
Document Summary
Influences the corporate governance arrangements in place in these economies. Market-based: requires investors to exert influence on the management of the company, relies on capital markets to influence corporate management, adv: responds dynamically to changes, disadv: potential of index funds to undermine accountability and short-term https://www. investopedia. com/terms/m/market-based-corporate-governance. asp. Bank-based: design of a board of directors so that most/all of the members are either bankers or insiders. Different countries have opted for different corporate governance systems in terms of finance. Uk and us rely on the stock market as their main source of finance, but germany is more bank financed. By financing it through the market you generally have a greater shareholder base. Also, it influences the type of governance regulations as it may provide greater focus on the rights of the lenders. They may have greater incentive to monitor the corporation and therefore they adopt greater governance measures. And because this is published to shareholders, this can impact share price and equity.
