The Nature of Corporate Governance
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The Nature of Corporate Governance

The Significance of National Cultural Identity

  • Corporations, Globalisation and the Law series

Janet Dine

This book presents a thoughtful inquiry into the nature and rationale of corporate governance. The authors address fundamental questions including; What is the balance between ownership and control?; For whose interests should the company be run?; What is the institutional balance between shareholders, directors and other potential stakeholders, including the economy?
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Chapter 5: Germany

Janet Dine

Extract

Germany is a country which occupies a central position within the EU’s political and economic context. However, it is neither the obvious significance of the country as the continent’s main economic power nor geopolitics that renders a chapter on Germany necessary. It is rather the fact that this country has gradually shaped a system of corporate governance which has proved to be particularly influential for other countries looking to make like-minded reforms. The German system of corporate governance evolved in close conjunction with the developments taking place in the country at economic and (frequently problematic) political level, and it clearly reflects both the main historical trends in the German society and also the main political choices that shaped its society. The corporate governance system in Germany took its current shape in the post-Second World War period, when successive governments made the conscious choice to construct an inclusive governance system based on consensus between its various constituencies. The German company grants ample room to employee participation, accommodating it within the actual institutional setting of the company; this is embodied in the landmark dual board system that even today remains the most distinctive feature of the German corporate governance model. The corporate landscape in Germany is characterised by a dense network of companies closely related to each other and to the banking system. The banks play a pivotal role in corporate governance as they have historically been the provider of capital to German enterprises; their significance is marked with their presence at the level of corporate boards.

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