Principles and Practices of Corporate Governance: in the Global Economy

by Alessandro Minichilli, Fabio Quarato, Luciano Segreto

Overview

The book places ownership at the center of all relevant choices that the company makes: in particular, it addresses the “problem” of governance from the perspective of ownership, and in a broader and more articulated sense than most Anglo-Saxon studies. The authors analyze the relationship between ownership, governance, and corporate strategy, with a dual objective. On the one hand, the aim is to identify the consistency relationships between the governance structure of the company and its results, because of the centrality that it assumes with respect to many of the strategic choices that companies make. On the other hand, the objective is to consider possible variants to the “basic scheme,” going to investigate the role of ownership, governance and management from a contingency perspective, i.e. in different types of enterprise: public companies, multinational enterprises, state-owned enterprises, and especially family-owned enterprises are analyzed. The second part of the book analyzes, in a number of countries, different economic and business systems and their role in defining the type of corporate governance that has emerged.

Product Details

ISBN-13:	9788831322171
Publisher:	EGEA Spa - Bocconi University Press
Publication date:	11/04/2020
Sold by:	INDEPENDENT PUB GROUP - EPUB - EBKS
Format:	eBook
Pages:	356
File size:	5 MB

About the Author

Alessandro Minichilli is Associate Professor of Business Administration at Bocconi University, and Director of Research in the "Claudio Demattè Corporate and Financial Institutions" Division of SDA Bocconi School of Management. Fabio Quarato is Lecturer of Corporate Governance and Business Administration at Management Department of Bocconi University. He is Managing Director of the AIDAF-EY Chair in Strategic Management in Family Business in memory of Alberto Falck. Luciano Segreto is Adjunct Professor of Corporate Governance at Bocconi University and Visiting Professor of Systems of Corporate Governance at the Gdansk University of Technology. He is a Full Professor of Economic History and the Economic History of Globalization at the Department of Economics and Management of the University of Florence. Alessandro Minichilli is Associate Professor of Business Administration at Bocconi University, and Director of Research in the "Claudio Demattè Corporate and Financial Institutions" Division of SDA Bocconi School of Management. Fabio Quarato is Lecturer of Corporate Governance and Business Administration at Management Department of Bocconi University. He is Managing Director of the AIDAF-EY Chair in Strategic Management in Family Business in memory of Alberto Falck. Luciano Segreto is Adjunct Professor of Corporate Governance at Bocconi University and Visiting Professor of Systems of Corporate Governance at the Gdansk University of Technology. He is a Full Professor of Economic History and the Economic History of Globalization at the Department of Economics and Management of the University of Florence. is Associate Professor of Business Administration at BocconiUniversity, and Director of Research in the “Claudio Demattè Corporate andFinancial Institutions” Division of SDA Bocconi School of Management. is Adjunct Professor of Corporate Governance at Bocconi University and Visiting Professor of Systems of Corporate Governance at the Gdansk University of Technology. He is a Full Professor of Economic History and the Economic History of Globalization at the Department of Economics and Management of the University of Florence. Alessandro Minichilli is Associate Professor of Business Administration at Bocconi University, and Director of Research in the "Claudio Demattè Corporate and Financial Institutions" Division of SDA Bocconi School of Management. Fabio Quarato is Lecturer of Corporate Governance and Business Administration at Management Department of Bocconi University. He is Managing Director of the AIDAF-EY Chair in Strategic Management in Family Business in memory of Alberto Falck. Luciano Segreto is Adjunct Professor of Corporate Governance at Bocconi University and Visiting Professor of Systems of Corporate Governance at the Gdansk University of Technology. He is a Full Professor of Economic History and the Economic History of Globalization at the Department of Economics and Management of the University of Florence. is Lecturer of Corporate Governance and Business Administrationat Management Department of Bocconi University. He is Managing Director ofthe AIDAF-EY Chair in Strategic Management in Family Business in memory ofAlberto Falck.

Table of Contents

Introduction ix

1 Corporate Governance. Why, When, and How? 1

1.1 One vote, one share, and the problem of substantive democracy 1

1.2 Towards regulation, disclosure, and transparency 5

1.3 Discovering and reforming "continent" Corporate Governance 8

Part 1 Governance and Management

2 Ownership, Governance, and Management of Companies 17

2.1 What is corporate governance? 17

2.2 The different perspectives of corporate governance 19

2.3 The "traditional" corporate governance problem 23

2.4 The public company and the agency theory 25

2.4.1 A first variant of the agency's basic scheme 27

2.4.2 A second variant of the agency's basic scheme 29

2.5 The origins of "bad governance" 31

2.6 The signs of "bad governance" 34

2.7 Responses to the problem of "bad governance" 37

2.7.1 Imposing structures, rules, and mechanisms 38

2.7.2 Making markets efficient 40

2.7.3 Favoring certain capital structures 42

3 Corporate Governance Mechanisms: The Board of Directors. Past, Present, and Future 51

3.1 The role of the board of directors in company governance 51

3.2 The international corporate governance codes 54

3.2.1 One example: The UK Corporate Governance Code and its evolution 55

3.2.2 The new 2018 edition of the UK Corporate Governance Code 57

3.3 The characteristics of the board of directors 59

3.3.1 The composition 59

3.3.2 The structure 67

3.3.3 The working style 72

3.4 The board evaluation 77

3.4.1 Five different international approaches for board evaluations 80

3.4.2 Good practices: The WWWH questions 83

3.5 The future challenges 84

4 The Ownership Structure and Related Governance Models 93

4.1 The characteristics of ownership structures 93

4.1.1 Ownership concentration 93

4.1.2 Owner identity 97

4.2 The various forms of ownership structure 100

4.2.1 Public companies 101

4.2.2 Mixed coalitions 102

4.2.3 Multi-National Enterprises (MNEs) 103

4.2.4 State-Owned Enterprises (SOEs) 110

4.2.5 Private equity and venture capital 114

4.2.6 "Non-capitalist" enterprises 117

5 The Family-Controlled Firm 125

5.1 What are family-controlled firms? 125

5.2 The distribution of family-controlled firms around the world 126

5.3 The peculiarities of family-controlled firms 128

5.4 Family ownership in different theoretical frameworks 131

5.5 The corporate governance of family-controlled firms 134

5.6 The main challenges of family firms: Openness and generational change 136

6 Ownership, Governance, and Strategy 145

6.1 The relevance of the topic 145

6.2 The relationships between ownership, governance, and strategy: A basic model 147

6.2.1 Context conditions 149

6.2.2 Consistency relationships between the variables of the model 151

6.2.3 The first variant in the case of public companies 153

6.2.4 The second variant in the case of controlling shareholders 156

6.3 The role of ownership in strategic choices 160

6.3.1 The ownership structure: Some "dichotomies" 160

6.3.2 The main corporate strategic choices 162

6.3.3 The possible relationships between ownership structures and strategic choices 164

6.4 The relevance and the new frontiers of corporate governance 166

6.4.1 Environmental, social, and governance (ESG) investing 168

6.4.2 Investors' activism and shareholders' engagement 171

6.5 Some final implications and suggestions 173

6.5.1 Strengthening the role of ownership (where it is weak) 174

6.5.2 Strengthening the role of governance bodies (when the ownership is strong) 175

6.5.3 Beyond compliance: The importance of governance in private companies 176

Part 2 Adopting And Adapting Corporate Governance Around the World

7 Germany, One of the Homes to Corporate Governance 189

7.1 At the very origins of the model 189

7.2 Germany between Ordo-liberalism and Mitbestimmung 192

7.3 Toward the Code of Corporate Governance 194

7.4 The difficulties despite the long tradition: Scandals, institutional investors, and German corporate governance 197

8 France, Corporate Governance, the Resilience of the Past, and Market Pressure 207

8.1 Is corporate governance a State affair? From Colbert to the privatization process of the 1980s 207

8.2 The evolution of the ownership structure, the PDG, and the "new" corporate governance 210

8.3 Protecting minority shareholders, or favoring long-term investors? The French dilemma 213

8.4 The resistance: Old habits die-hard 215

9 Italy, Corporate Governance, and the Many Paradoxes of an Advanced Economy 225

9.1 The historical background 225

9.2 The Italian mixed economy 227

9.3 The reforms, finally 229

10 Japan, Corporate Governance, and the Culture of Harmony 241

10.1 Corporate governance between history and culture: From the zaibatsu to the keiretsu 241

10.2 The lost decade and the need for economic reforms 244

10.3 From the new Commercial Law to the first Code of Corporate Governance 248

11 Corporate Governance in Emerging Countries. Between Market, State, and Family: The Cases of Brazil, Argentina, India, and China 257

11.1 The emerging economies and the capital markets 257

11.2 Brazil, corporate governance, and the need for stability 260

11.2.1 The privatization process of the 1990s 260

11.2.2 The new rules concerning corporate governance 261

11.3 Argentina, corporate governance and the dream of common law 263

11.3.1 The impossible bid of the 1990s: From civil law to common law 263

11.3.2 The 2001 default and its consequences for corporate governance 265

11.4 India: Corporate governance, and the contradictions of the world's biggest political democracy 267

11.4.1 The British legacy 267

11.4.2 The economic reforms of the 1990s and the introduction of the code of corporate governance 269

11.4.3 Between the largest stock exchange and the power of family capitalism 272

11.5 China, corporate governance, the power of the State, and the ineluctable strength of the market 275

11.5.1 The economic reforms 275

11.5.2 The Chinese stock market and the introduction of corporate governance 277

11.5.3 The anti-corruption campaign and corporate governance 282

12 Between the State and the Market: Corporate Governance in Former Centrally Planned Economies. The Cases of Russia and Poland 293

12.1 Russia, corporate governance and the never-ending transition to a market economy 293

12.1.1 The difficult transition from a Soviet economy to a market economy 293

12.1.2 The weakness of the capital market 296

12.1.3 The introduction of the code of corporate governance: How to pay a "debt" to Western countries 298

12.1.4 The State and the society: Two conflicting actors for good corporate governance? 300

12.2 Poland, corporate governance, the strength of the market, and the resistance of the blockholders 302

12.2.1 Rediscovering the market 302

12.2.2 The beginning of corporate governance 304

12.2.3 The concentration of ownership and the role of the pension funds 307

Bibliography 315

Index of names 337