International Perspective to Corporate Governance

Introduction
Concept of the borderless corporation. International marketplace creates very specific complications. Corporations and their structure are unique to the countries in which they are situated. Unique political (e.g. corruption in India) and social landscapes (e.g. India has family run businesses)
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Corporations Around the World

Political, social, and economic landscapes work together with historical events to shape the corporate structures. E.g. Stock market crash in U.S.A., family owned businesses in India. U.S. corporate model-premium that it places on the interests of the shareholders.

Corporations Around the World

Stakeholder model- United Kingdom and Japan, the interests of the employees, partners, consumers, and general public are also considered, to varying degrees. Family model- East Asian and Latin American countries, place priority on family interests.

International Corporations
Inexpensive labor and lower tax rates- draw company activities away from developed countries and into emerging nations. e.g. Nike does manufacturing Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia.

Accusation of Ill Treatment of Employees

Lawsuit, filed in San Francisco superior court. Accused Nike of violating California's consumer laws by willfully misleading the public about working conditions of the Vietnamese, Chinese and Indonesian laborers producing Nike shoes. Asian sweatshop workers are regularly subject to physical punishment.
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Accusation of Ill Treatment of Employees

Nike factory workers exposed to dangerous chemicals, forced to work overtime, sometimes without pay, and often unable to earn a living wage. Child labor. Using deception for profit. Settled the case for $1.5 million.

Companies Accused of Child Labor

Nike- Vietnam, China, Indonesia. Coca Cola- El Salvador. Apple- China. Zara- Brazil.

Companies Accused of Child Labor

Indian company fired by the clothing retailer, Gap Inc. Reports of child labor. Subcontractor fired.

International Corporations
Manipulate their international standing to avoid penalties, labor codes, and environmental regulations. Increasing revenue by limiting expenditures.

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International Corporations
Differences in laws and customs. Hinder a corporations ability to apply one uniform set of Corporate Governance policies to all of its subsidiaries.

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Global Investors
When a corporation of one nation lists itself on the market of another nation, it is referred to as a foreign issuer.

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Classifications
1. American Depositary Receipts- a foreign stock that trades on one of the U.S. exchanges. 2. Global Depositary Receipts- a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account.

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Global Corporate Governance Forum

This forums general mission also includes efforts to educate the international market on the importance of good Corporate Governance.

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International Efforts to Create Good Corporate Governance Policies

Organizations responsible for the establishment of universal Corporate Governance principles: Organization for Economic Co-operation and Development International Corporate Governance Network Commonwealth Association for Corporate Governance
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Organization for Economic Cooperation and Development

Working with its member countries and those outside of its membership to help establish the groundwork for national Corporate Governance standards.

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International Corporate Governance Network

Working with investors to increase education efforts and establish Corporate Governance guidelines across international borders.

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Commonwealth Association for Corporate Governance

Working primarily with African nations to promote the development of good Corporate Governance practices for corporations within the continent.

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