Corporate governance

Part A

Corporate governance is a kind of umbrella that unites all groups of participants. I will highlight two major problems of corporate governance of the participants who wins and who should win in every decision in a corporation. Organizational model, which is designed on the one hand, to regulate the relationship between company managers and their owners, on the other - to agree on the objectives of various stakeholders, thereby ensuring the effective functioning of companies and was named corporate governance system.

American system of corporate governance is associated with the peculiarities of the national stock ownership. Market is characterized by very high spray capital corporations. Population saves money by investing in stocks and bonds of companies. Firms sell their securities to investors to obtain financing for business expansion. The main owners of capital companies are private and institutional investors. They are willing to take risks and focus on short-term goals of income due to exchange rate differences. Investors to invest in the company, they must be sure that the corporate governance effectively. Investors monitor corporate governance and shareholder value in the market depends on the quality of this control.

The stock market is highly liquid through it there is a transition of control over large companies. The main forms of market surveillance for the U.S. market are numerous mergers, acquisitions and buyouts. Thus, through the market for corporate control provides effective control of the market by the activities of managers. Exchange and the country's laws require mandatory disclosure of financial information and establish rules prohibiting managers manipulate the companies' shares. Managers who violate these rules, shareholders may be involved to justice. Fiduciary duties of managers of the top level management is usually well defined, and in case of violation shareholders are entitled to take legal action for compensation for damage to them or block the adoption of control solutions, contrary to their interests. In this model, banks play a minor role. This is due to the economic development of countries, particularly the United States.

In the early twentieth century in the United States have spread the business group ("Empire" Rockefeller, Gould, Vanderbilt, Morgan). Corporate structures are organized in a multi-holding. In 1928, the Federal Trade Commission accused the data business group of monopoly and weak corporate governance. During the Great Depression of the 1930s. the main reason for which was the fusion of industrial and financial capital, most corporate entities defaulted on debts. The administration of President Franklin D. Roosevelt implemented a series of tax reforms aimed at eliminating business groups and holding companies. At the same time in 1933, a reform of the securities market and banking reform. Glass-Steagall prohibited banks have at their disposal more than 5% of the voting shares of other companies directly or through affiliates. The reason for the adoption of this law is the requirement of "transparency" in the stock market to prevent speculation and Privacy deposits in commercial banks. The law is also intended to eliminate conflicts of interest arising from the merger ...