Corporate Governance, Regulation and Financial Markets. Germany's Pathway to a Market-Based System?

Term Paper (Advanced seminar) , 2015 , 40 Pages , Grade: 1,3

Economics - Finance

Few areas of business economics are discussed in such a controversial manner as different corporate governance systems. In a globalized age in which the capital markets of industrialized countries have a large operating range and a growing degree of internationalization, the design and regulation activities in this field have become increasingly important. This has triggered a "competition of institutions".

In the current academic discussion, different corporate governance paradigms are being examined, to figure out, which could be the most successful in a market economy in order to attract investors. It considers what system of management of a capitalled company is the most appropriate - in order to provide a location or rather a country - a competitive advantage in competition for global players. It is assumed that the type of the corporate governance system influences the company’s success or even more on the entire national economy.
As reference points, the German and the US model are often being used. Since they are opposed to one another in their paradigmatic and thus embody the exemplary corporate governance system. In addition, since the Cold War and beyond, the US has been a hegemon and has always had a great influence on the economic and financial system worldwide. Germany is regarded as the political and economic core of the most important partner of the USA, the European Union. Both are regarded as a highly developed economic system; their further development will attract attention beyond their national borders.
Although, the aim of corporate governance is identical, the institutional design and the underlying philosophies differ. As of a 1980´s it appears that the German bank-based system cannot meet the needs of the swift progress of financial markets. From the 1990s onwards, especially in the case of some serious legal measures in Germany, a move towards capital market orientation has been taking place. Since the prediction of a system convergence has been considered critical - because they are embedded in a corresponding cultural and socioeconomic system, which makes the transferability of the respective economic paradigms doubtful - this paper tries to examine if these legal regulations triggered a change in the German financial system.

Contents

1 Introduction

2 Why Corporate Governance Matters
-2.1 Definition and Intended Purpose
-2.2 Theoretical Foundations

3 Corporate Governance as a System: Historical and Political Context
-3.1 Origins of US Shareholder Capitalism
-3.2 Origins of German Stakeholder Capitalism

4 Globalization: A Potential for Convergence
-4.1 Why Convergence?
-4.2 The German Financial System in Flux

5 Conclusion

List of Figures

List of Tables

List of Abbreviations

References

• College: University of Leipzig (Wirtschaftspolitik)
• Course: Development of Financial Markets and Institutions
• Grade: 1,3
• Author: Alexander Behne (Author)
• Publication Year: 2015
• Pages: 40
• Catalog Number: V355592
• ISBN (eBook): 9783668415843
• ISBN (Book): 9783668415850
• Language: English
• Tags: corporate, governance, regulation, financial, markets, germany, pathway, market-based, system