CINEMA 7 Lecture Notes - Lecture 26: Financial Institution, Financial Statement, Takeover
Document Summary
How context & culture affect corporate governance: context in which cg is practised, cultural influences on cg, patterns of ownership. Voting shares highly differentiated: directors need to respond to varied expectations, while recognising that shareholders can act together. Dominant owner: directors need to respond to expectations of dominant shareholder. Pattern of ownership affects ability of board to exercise power: markets for corporate control. High proportion of external investors: board can be faced with hostile takeover bid & loss of control. Low proportion of external investors: market for corporate control is weaker; fewer m&as. Large equity markets: shareholdings widely spread; board can wield significant power over company although ultimate voting power with shareholder. Small stock markets: rely on non-equity loan capital; ultimate control in hands of lender: culture influences on corporate governance. Board-level behaviour differs from culture to culture. Differences should not be used to defend poor governance practices.
