BUSI 4500 Lecture Notes - Lecture 2: Msci, Keiretsu, Financial Statement
7 May 2018
School
Department
Course
Professor
Lecture 2
International corporate governance
- factors
o basic ownership & control structure
▪ Dispersed ownership vs concentrated ownership by
families or corporations
o Protection of shareholder rights
▪ Common law legal system vs civil law legal system
- Germany & jpn
o Cross holding
▪ Firm own stock in order firm and make decision in best
interest of industrial grp belong
o Keiretsu
▪ Financial grp control I in collection of firms (interlock
relationship – owner –lender structure)
o Civil law legal system
o Cons
▪ Some industrial grp is risk –averse, entire industry may go
down due to poor governance
▪ some owners-lenders follow a laisser-faire governance
style : no government intervention
Principle of good governance
- Sarbanes Oxley Act 2002
- Executive compensation guidelines
- rely on strong and effective board
- promote ethical and responsible decision making
- ensure the integrity in financial reporting
- make timely disclosures
- respect the rights of shareholders and the interests of stakeholders
- manage risks
- remunerate fairly and responsibly
- review and create ethical & law abiding culture
Ways to measure effectivess of corporate governance
- capacity of system to adapt new changes/ detect fraud and excessive
behavior
- The capacity to restrict management’s ability to obtain private benefits
from control
- Easy access of firms in need of capital to capital markets
- Ease with which inefficient management is replaced
- governance index/ database
o institutional shareholder services
o investor responsibility research centre
o world governance indicators
o dow jones sustainability index
o MSCI corporate governance score
find more resources at oneclass.com
find more resources at oneclass.com
