European Corporate Governance Models

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EC Company Law Coursework 2, Q. 1 - European Corporate Governance Models

Since mid-1980s corporate governance has attracted attention world-wide. From board of directors' composition and operation to relationship between shareholders, managers and directors, it has evolved into holistic company control system amidst global competition, weighing all stakeholders' interests1.

Each country's corporate governance model is characterised by distinctive legal, cultural and other contexts, but broadly comparable countries can form corporate governance systems. Anglo-American outsider system favours shareholder value maximisation in influential capital market, while continental European insider system, German and Dutch models, favours broader stakeholder approach in socially-orientated market economy2. This work shall consider following corporate governance areas: capital markets' financial role, ownership and control, shareholder rights and financiers' protection, external market for corporate control and anti-takeover defences, board system, disclosure rules and accounting standards, company's role and accountability.

Capital markets' financial role - market capitalisation ratio in 1975-2000 has grown in all continental countries3, catching up with UK on equity raised through IPOs4 in 1998-19995. Germany progressed less than UK in IPOs; British companies attracted far more outside finance in 1990s, though both countries had similar average growth, German companies experiencing