Divergence or convergence: paradoxes in corporate governance?

Abstract

Purpose – This review paper aims to compare the various dimensions in the finance literature pertaining to the Anglo-Saxon Model (Stockholder Model) prevalent in the USA and the UK with the German Model (Stakeholder Model) of corporate governance prevalent in Germany and continental Europe. The present study identifies different strands of research on the various dimensions of these models, along with aspects of governance in emerging economies and the phenomenon of the convergence of these governance mechanisms. Design/methodology/approach – The literature review on corporate governance models has been carried out on the themes of internal and external governance mechanisms. The review considers agency theory along with principal–principal (PP) conflicts as the fundamental blocks explaining the need for governance structures. Findings – The traditional models of governance, along with the incorporation of PP conflicts, will result in a hybrid model inculcating the best of both the traditional models. However, convergence in the true sense may not be possible owing to fundamental differences pertaining to cultural, economic, legal and socio-economic aspects of the firm. Originality/value – This paper proposes a framework incorporating the interplay of managerial talent and controlling shareholders to understand the governance system that may be applicable for firms in emerging economies.

Foreign investors? The effects of the property structure and legal system as mechanisms of corporate governance in Brazilian regulated companies

“…However, the authors suggested that the gap that interferes with the legal system is the lack of parameters to evaluate public enterprises around the world through the ownership structure. Chhillar and Lellapalli (2015) show that traditional governance models, coupled with the incorporation of Principal-Main conflicts, will result in a hybrid model that will instill the best of the two traditional models. However, convergence in the true sense may not be possible due to fundamental differences regarding the cultural, economic, legal and socioeconomic aspects of the company, as the legal system emphasizes heterogeneous regions in the behavior of investments and doubts in the negotiations in the sphere on stock exchanges.…”

Corporate governance practices: global convergence and Indian perspective

“…The challenges are bound to increase further with the growing complexity of global companies working under different domestic and international environments. These circumstances lead to a new operating environment for companies, and the harmonisation or convergence of CG norms has become imperative (Chhillar and Lellapalli, 2015). There is a considerable need for the emergence of CG infrastructure; therefore, the implementation of the global standards embodied by the OECD principles of CG becomes vital to succeed, and the regulator of governance standards requires companies to make a concerted effort to achieve compliance and enforcement.…”

Para Onde Estamos Caminhando? Uma Análise das Pesquisas em Governança Corporativa

“…No entanto, existem outros tipos de conflitos de interesses, que são pouco observados nas investigações teóricas e empíricas. Um exemplo disso é o conflito de interesses entre principais, ou seja, entre acionistas majoritários e acionistas minoritários, que prevalece em empresas cuja propriedade é concentrada, com baixa proteção ao investidor (Chhillar & Lellapalli, 2015). Outro conflito de interesse pouco explorado nas pesquisas é entre credores e gestão/acionistas, uma vez que os credores fornecem recursos e possuem direitos sobre o fluxo de caixa da empresa, instituindo assim covenants.…”