Handbook on International Corporate Governance: Country Analyses, 2nd Edition

480 Pages·2011·2.06 MB·English

by  Christine A. Mallin

HANDBOOK ON INTERNATIONAL CORPORATE
GOVERNANCE

Handbook on International
Corporate Governance
Country Analyses, Second Edition
Edited by
Christine A. Mallin
Professor of Corporate Governance and Finance and Director,
Centre for Corporate Governance Research, University of
Birmingham, UK

Edward Elgar
Cheltenham, UK • Northampton, MA, USA
©Christine A. Mallin 2011
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic, mechanical or
photocopying, recording, or otherwise without the prior permission of the publisher.
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
Edward Elgar Publishing, Inc.
William Pratt House
9 Dewey Court
Northampton
Massachusetts 01060
USA
A catalogue record for this book is available from the British Library
Library of Congress Control Number: 2010929038

ISBN 978 1 84980 123 2 (cased)
Typeset by Cambrian Typesetters, Camberley, Surrey
Printed and bound by MPG Books Group, UK
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0
Contents
List of contributors vii
Introduction and overview ix
Christine A. Mallin
PART I CORPORATE GOVERNANCE IN EUROPE
1 Corporate governance developments in the UK 3
Christine A. Mallin
2 Recent corporate governance developments in Spain 14
Silvia Gómez-Ansón and Laura Cabeza-García
3 Corporate governance in Germany: basic characteristics, recent
developments and future perspectives 36
Axel v. Werder and Till Talaulicar
4 Corporate governance in Italy: normative developments
vs. actual practices 59
Andrea Melis and Silvia Gaia
5 From Colbert to Messier: two decades of corporate
governance reforms in France 93
Pierre-Yves Gomez
6 Corporate governance in Norway: women and employee-elected
board members 121
Janicke L. Rasmussen and Morten Huse
PART II CORPORATE GOVERNANCE IN CENTRAL AND
EASTERN EUROPEAN COUNTRIES
7 Corporate governance in Russia: does a culture really change? 149
Alexander Settles, James Gillies and Olga Melitonyan
8 Corporate governance in Poland 177
Piotr Tamowicz
9 Corporate governance and the structure of ownership
of Hungarian corporations 192
Álmos Telegdy
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vi Handbook on international corporate governance
PART III CORPORATE GOVERNANCE IN EAST AND
SOUTH EAST ASIA
10 China’s corporate governance development 223
On Kit Tam and Celina Ping Yu
11 Corporate governance in Japan 247
Christina L. Ahmadjian and Ariyoshi Okumura
12 Corporate governance in Malaysia: the macro and micro issues 269
Mohammad Rizal Salim
PART IV CORPORATE GOVERNANCE IN THE AMERICAS AND
AUSTRALIA
13 Compensation committees and CEO pay 297
Martin J. Conyon
14 The emergence of a serious contender: corporate governance
in Brazil 317
Ricardo P.C. Leal
15 The development of corporate governance in Australia 330
Geof Stapledon
PART V CORPORATE GOVERNANCE: ADDITIONAL
DIMENSIONS
16 ‘Comply or explain’ without consequences: the case of Turkey 355
Melsa Ararat
17 Some reflections on corporate governance in the Middle East
and North Africa (MENA) region 371
David Weir
18 Corporate governance in South Africa 390
Lynn McGregor
19 Corporate governance developments in India 414
Shri Bhagwan Dahiya and Nandita Rathee
Index 433
Contributors
Christina L. Ahmadjian, Professor and Dean, Graduate School of
International Corporate Strategy, Hitotsubashi University, Tokyo, Japan.
Melsa Ararat, Professor and Director, Corporate Governance Forum of
Turkey, Sabancı University, Turkey.
Laura Cabeza-García, Assistant Professor of Business Administration,
University of León, León, Spain.
Martin J. Conyon, Professor, IE Business School, Spain, and Senior Fellow,
the Wharton School, Center for Human Resources, University of
Pennsylvania, USA.
Shri Bhagwan Dahiya, Director Institute of Development Studies, and
Professor of Economics, Maharshi Dayanand University, Rohtak, India.
Silvia Gaia, Department of Business Administration and Law, University of
Rome Tre, Rome, Italy.
James Gillies, Dean Emeritus of the Schulich School of Business, Canada,
and former Chair of the Canada/Russia Corporate Governance Program.
Pierre-Yves Gomez, Professor, EM LYON Business School, and Director of
the French Corporate Governance Institute (IFGE), Lyon, France.
Silvia Gómez-Ansón, Professor of Finance and Accounting, University of
Oviedo, Spain.
Morten Huse, Professor, Norwegian School of Management BI and

TorVergata University, Rome, and President European Academy of
Management.
Ricardo P.C. Leal, Professor of Finance, The Coppead Graduate School of
Business at the Federal University of Rio de Janeiro, Brazil.
Christine A. Mallin, Professor of Corporate Governance and Finance, and
Director, Centre for Corporate Governance Research, University of
Birmingham, UK.
Lynn McGregor, Senior Fellow Corporate Governance Unit, Stellenbosch
University, South Africa.
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viii Handbook on international corporate governance
Andrea Melis, Associate Professor of Accounting and Business
Administration, University of Cagliari, Italy.
Olga Melitonyan, Lecturer, Higher School of Economics, Moscow, and
former Manager of the Canada/Russia Corporate Governance Program.
Ariyoshi Okumura, Chairman, Lotus Corporate Advisory, Inc., Ex.
Managing Director, The Industrial Bank of Japan, and Former Board
Governor, International Corporate Governance Network.
Janicke L. Rasmussen, Associate Professor, Norwegian School of
Management, Oslo, Norway.
Nandita Rathee, Head, Department of Management Studies, PDM College of
Engineering, Bahadurgarh, India.
Mohammad Rizal Salim, Associate Professor of Law, Nottingham
University Business School, The University of Nottingham Malaysia Campus,
Malaysia.
Alexander Settles, Professor of Corporate Governance, Faculty of
Management, Higher School of Economics, Moscow.
Geof Stapledon, Group Manager Governance, BHP Billiton, and Professorial
Fellow, University of Melbourne, Australia.
Till Talaulicar, Professor of Corporate Governance and Board Dynamics,
Witten/Herdecke University, Germany.
On Kit Tam, Professor of Economics, College of Business, RMIT University,
Melbourne, Australia, and Director, China Center for Institutional Investor,
Nanjing University, China.
Piotr Tamowicz, Co-Founder, Polish Forum for Corporate Governance,
Warsaw, Poland.

Álmos Telegdy, Senior Researcher, Institute of Economics – Hungarian
Academy of Sciences, and Co-director, CEU Labor Project, Budapest,
Hungary.
David Weir, Professor of Intercultural Management, Liverpool Hope
University, Liverpool, UK.
Axel v. Werder, Professor of Organization and General Management,
Technical University of Berlin, Germany.
Celina Ping Yu, College of Business, RMIT University, Melbourne,
Australia.
Introduction and overview
Christine A. Mallin
In recent years many countries have experienced economic downturns, finan-
cial scandals and corporate collapses. As part of the response to these events,
countries across the globe have either introduced corporate governance codes
or strengthened their existing codes and guidelines.
The Organisation for Economic Co-operation and Development (OECD)
issued its revised Corporate Governance Principles in 2004, and the
International Corporate Governance Network (ICGN) issued its revised
Statement on Global Corporate Governance Principles in July 2005. The
ICGN further revised its Global Corporate Governance Principles in 2009
‘based on a review and reconsideration of the ICGN’s existing Principles in
the light of what we have learned since they were agreed in 2005, not least
through the most recent turbulent times’.
The purpose of this volume is to highlight the development of corporate
governance in a range of countries from different parts of the world. The
volume has five parts which focus on different regions and thereby illustrate
the evolution of corporate governance in both developed and emerging
markets, in different legal settings, and with varying ownership structures.
CORPORATE GOVERNANCE IN EUROPE

Part I focuses on corporate governance in various European countries. Within
Europe there exists both the unitary board system of governance and the dual
board system. Corporate governance developments in the UK are covered in
Chapter 1 by Chris Mallin. The UK has a dominance of institutional share
ownership and a unitary board structure whereby executive and non-executive
directors serve on one board. Silvia Gómez-Ansón and Laura Cabeza-García
provide an insightful view of corporate developments in Spain whilst Axel v.
Werder and Till Talaulicar provide a detailed analysis of the corporate gover-
nance developments in Germany. Germany, of course, has a dual board system
with a supervisory board and management board. The German law of co-
determination mandates employee representation on the supervisory board up
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to a maximum of half the supervisory board membership, depending on the
size of the company. Andrea Melis and Silvia Gaia provide an interesting
analysis of developments in corporate governance in Italy, with its unique
provision for a board of statutory auditors. Pierre-Yves Gomez discusses the
development of corporate governance in France and the influence of elites.
Finally Janicke Rasmussen and Morten Huse provide interesting insights into
corporate governance in Norway, especially into board structure and the role
of boards and the participation of women and employee-elected board
members.
CORPORATE GOVERNANCE IN CENTRALAND
EASTERN EUROPEAN COUNTRIES
Russia, Poland and Hungary are the three countries featured in this part of the
book. Alexander Settles, James Gillies and Olga Melitonyan detail the devel-
opment of corporate governance in Russia, including the impact of the finan-
cial crisis, and ponder on how it might develop in the future. Meanwhile in a
Polish context, Piotr Tamowicz analyses the system of corporate governance
that has developed in Poland. Finally Álmos Telegdy details the development
of corporate governance in Hungary. The privatization waves which occurred
in all three countries in the 1990s inevitably influenced the way in which the
corporate ownership structure developed in each country and we can see how
this influences the implementation and effectiveness of corporate governance
in each of these three countries.
CORPORATE GOVERNANCE IN EASTAND SOUTH EAST
ASIA

In this section, corporate governance developments in China, Japan and
Malaysia are discussed. On Kit Tam and Celina Ping Yu examine some of the
major milestones and key issues in the more recent development of China’s
corporate governance. They highlight the fact that China is currently at a
crucial new phase in the development of its corporate governance system
where the major concern is shifting from a focus on the introduction of formal
rules and regulations to more comprehensive institution building to make the
system work in the interest of all types of stakeholders. There have been a
number of major corporate governance developments in Japan, especially
since the bursting of Japan’s economic bubble, and the chapter by Christina
Ahmadjian and Ariyoshi Okumura details these with clarity. Finally,