Corporate Governance Practices An International Comparison

Sl. No. 1 2 Features Corporate Objectives Shareholding Anglo American CG Shareholders value Diffused institutional investors, significant block investors. German CG Long-term corporate value Banks, Promoter families other companies Corporate body Return on human capital Within the network of stakeholders including employees local community. Linked with ownership Long-term Plant & Equipment employee training Less important due to close ties with banks Not important hostile takeovers rare Japanese CG Long-term corporate value Financial and nonfinancial corporates Indian CG Shareholders value. Directors and relatives, Other corporates, foreign investors, govtterm lending agencies. Maximize surplus

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Governance focus Capital market Measure of success Decision making Return on financial capital Checks and balances between voice and exit options. Outside stakeholders excluded Separated from ownership Short-term driven by stock market prices Physical Capital, R & D human Capital Liquid Important frequent hostile takeovers possible.

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Control of corporates Orientation Long term investment in Capital market (Primary) Capital market (Secondary) Investors commitment Major investors Board Composition Goad of the board Board independence over the

Keiretsu or business network Return on social capital Return on financial capital Within network Management, outside includes business stakeholders excluded. associates and banks as stakeholders. Linked with ownership Linked with ownership Long-term R&D employee training Less important because of close ties with banks Not important hostile takeover rare Short-term gains Physical Capital Less important due to institutional funding. Not important hostile takeover rare

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management Executive compensation Dividend Strength Weakness