ºÝºÝߣ

ºÝºÝߣShare a Scribd company logo

Coporate governance×îÖÕ°æ

?Download as PPTX, PDF?
?
J
jinsisi

The document summarizes the WorldCom case study and compares corporate governance between the US and China. It discusses factors that led to WorldCom's failure, including collusion between senior executives, an unalert board of directors, and unreasonable loans given to the CEO. It then outlines key aspects of corporate governance in the US, including ownership structure, board independence, and the role of capital markets, regulations, and gatekeepers. Finally, it compares governance between the two countries, noting similarities based on internal control/external regulation systems, but also differences in culture, ownership concentration, and capital market development.

1 of 13
Downloaded 23 times
Corporate governance in US and China ¡ª¡ª Worldcom Case Study Group members: Sisi Jin 200896093 Rui Hua 200884223 Hui Lu 200893795 Wei Zheng 200908791
Outline Case WorldCom Corporate governance in United States Compare and Contrast between Corporate Governance in US and China
Why WorldCom failed????
? WORLDCOM LEADERSHIP Collude CEO-Bernard Ebbers CFO - Scott Sullivan ? few senior executive officers at its Clinton, Mississippi Headquarters direct supervisor ? accounting and financial department personnel Controller - David Myers
Unconcerned and Malfunctioning Board of directors ? Unalert top management ? Non-executive directors neglect of their duties. ? Whimsical CEO ¨C No technical qualification ¨C Priority to personal interest ? Unreasonable long tenures of board members ? Unreasonable loans and benefits given to Ebbers
Other reasons ? Recession of the economy ? Vast oversupply of capacity ? Unhealthy focus on profits
Source from: Jackson, Gregory, 2010, ¡®Understanding Corporate Governance in the United States¡¯, Arbeitspapier 223.
Internal Ownership structure 1. Participation in Governance ? Institutional investors: Directly to ? Ownership right voice their governance concerns 2. Access to the Vote 3. Shareholders¡¯ Right to Call a Meeting of Shareholders Internal firm corporate structure 1. The majority of the board must consist of ? Board of director independent directors (U.S. stock exchange listing standards). 2. The position of chairman of the board and the CEO should be separate. 1. Audit Committee ? Board committee 2. Compensation Committee Mandatory 3. Nominating/Governance Committee 4. Special Committees(e.g. the executive and finance committees)
External Environment ? Capital market: Liquidity, Efficient, and Transparent Poor corporate Governance may quickly reflected in its stock price (market correction mechanism) ? Regulation and Law: The corporate governance structure in the United States is a hybrid system of laws, regulations, and best practices. The primary drivers of corporate governance are state corporate laws, federal and state securities law, judicial process, stock exchange listing standards, best practices. ? Gatekeeper: External Auditors, securities analysts, legal counsel.
Compare and Contrast between Corporate Governance in US and China Corporate governance in US Corporate governance in China Similarities 1.Internal control & External regulation based system(Unitary Board). 1.Essential difference -- culture and history Emphasizes free competition culture, Reinforces submissive culture. are more likely have whistleblower. 2. Ownership structure Differences Shareholding are more dispersed. Shareholding are highly (Internal) concentrated. 3.Board of Directors NED > ED NED < ED so More independent directors in the NED + Board of supervision(no board of directors. voting rights)to achieve balance. ¡°one---vote negation system¡±
°ä´Ç²Ô³Ù¡¯»å Corporate Corporate Governance in US Governance in China 4. Capital Market Totally market-oriented Less efficient; economy£» Too much government Differences the Most efficient intervention; transparent & liquidity. Regulator & Participant. (External) 5. Law and Code Company Law£¨1992 2005£© State corporate laws£» --all companies Federal and state securities Security Law security laws &regulations. companies£¨2004£© Codes from CSRC -- listed companies etc£¨2001£©
Reference 1. Andrade, G./Mitchell, M./Stafford, E.: New Evidence and Perspectives on Mergers?, Journal of Economic Perspectives, 2001, p. 103-120. 2. Bratton, W. W.: Is the Hostile Takeover Irrelevant? A Look At the Evidence, George- town Law, Working Paper, 2007. 3. Buck, T. W./Shahrim, A.: The Translation of Corporate Governance Changes Across National Cultures: The Case of Germany, Journal of International Business Studies, 36, 2005, p. 42-61. 4. Canary, H./Jennings, M.: Principles and Influence in Codes of Ethics: A Centeringy Resonance Analysis Comparing Pre- and Post-Sarbanes-Oxley Codes of Ethics, Jour- nal of Business Ethics, 80(2), 2008, p. 263-278. 5. Choi, S. H./Frye, M. B./Yang, M.: Shareholder rights and the market reaction to Sarbanes-Oxley, Quarterly Review of Economics & Finance, 48(4), 2008a, p. 756-771. 6. Cohen, D. A./Dey, A./Lys, T. Z.: Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods, Accounting Review, 83(3), 2008, p. 757-787. 7. Conyon, M. J./Peck, S./Sadler, G. V.: Compensation Consultants and Executive Pay: Evidence from the United States and United Kingdom, Academy of Management Perspectives, 23(1), 2009, p. XX. 8.Fuller, J./Jensen, M. C.: Just Say No to Wall Street, Journal of Applied Corporate Finance, 14(2), 2002, p. 41-46. 9. Gourevitch, P. A./Shinn, J.: Political Power and Corporate Control : The New Global Politics of Corporate Governance Princeton, NJ: Princeton University Press, 2005. 10. Langevoort, D. C.: Internal Controls After Sarbanes-Oxley: Revisiting Corporate Law¡®s ?Duty of Care as Responsibility for Systems¡®, Journal of Corporate Law, 31, 2006, p. 949-973.
Coporate governance×îÖÕ°æ

More Related Content

Coporate governance×îÖÕ°æ

  • 1. Corporate governance in US and China ¡ª¡ª Worldcom Case Study Group members: Sisi Jin 200896093 Rui Hua 200884223 Hui Lu 200893795 Wei Zheng 200908791
  • 2. Outline Case WorldCom Corporate governance in United States Compare and Contrast between Corporate Governance in US and China
  • 4. ? WORLDCOM LEADERSHIP Collude CEO-Bernard Ebbers CFO - Scott Sullivan ? few senior executive officers at its Clinton, Mississippi Headquarters direct supervisor ? accounting and financial department personnel Controller - David Myers
  • 5. Unconcerned and Malfunctioning Board of directors ? Unalert top management ? Non-executive directors neglect of their duties. ? Whimsical CEO ¨C No technical qualification ¨C Priority to personal interest ? Unreasonable long tenures of board members ? Unreasonable loans and benefits given to Ebbers
  • 6. Other reasons ? Recession of the economy ? Vast oversupply of capacity ? Unhealthy focus on profits
  • 7. Source from: Jackson, Gregory, 2010, ¡®Understanding Corporate Governance in the United States¡¯, Arbeitspapier 223.
  • 8. Internal Ownership structure 1. Participation in Governance ? Institutional investors: Directly to ? Ownership right voice their governance concerns 2. Access to the Vote 3. Shareholders¡¯ Right to Call a Meeting of Shareholders Internal firm corporate structure 1. The majority of the board must consist of ? Board of director independent directors (U.S. stock exchange listing standards). 2. The position of chairman of the board and the CEO should be separate. 1. Audit Committee ? Board committee 2. Compensation Committee Mandatory 3. Nominating/Governance Committee 4. Special Committees(e.g. the executive and finance committees)
  • 9. External Environment ? Capital market: Liquidity, Efficient, and Transparent Poor corporate Governance may quickly reflected in its stock price (market correction mechanism) ? Regulation and Law: The corporate governance structure in the United States is a hybrid system of laws, regulations, and best practices. The primary drivers of corporate governance are state corporate laws, federal and state securities law, judicial process, stock exchange listing standards, best practices. ? Gatekeeper: External Auditors, securities analysts, legal counsel.
  • 10. Compare and Contrast between Corporate Governance in US and China Corporate governance in US Corporate governance in China Similarities 1.Internal control & External regulation based system(Unitary Board). 1.Essential difference -- culture and history Emphasizes free competition culture, Reinforces submissive culture. are more likely have whistleblower. 2. Ownership structure Differences Shareholding are more dispersed. Shareholding are highly (Internal) concentrated. 3.Board of Directors NED > ED NED < ED so More independent directors in the NED + Board of supervision(no board of directors. voting rights)to achieve balance. ¡°one---vote negation system¡±
  • 11. °ä´Ç²Ô³Ù¡¯»å Corporate Corporate Governance in US Governance in China 4. Capital Market Totally market-oriented Less efficient; economy£» Too much government Differences the Most efficient intervention; transparent & liquidity. Regulator & Participant. (External) 5. Law and Code Company Law£¨1992 2005£© State corporate laws£» --all companies Federal and state securities Security Law security laws &regulations. companies£¨2004£© Codes from CSRC -- listed companies etc£¨2001£©
  • 12. Reference 1. Andrade, G./Mitchell, M./Stafford, E.: New Evidence and Perspectives on Mergers?, Journal of Economic Perspectives, 2001, p. 103-120. 2. Bratton, W. W.: Is the Hostile Takeover Irrelevant? A Look At the Evidence, George- town Law, Working Paper, 2007. 3. Buck, T. W./Shahrim, A.: The Translation of Corporate Governance Changes Across National Cultures: The Case of Germany, Journal of International Business Studies, 36, 2005, p. 42-61. 4. Canary, H./Jennings, M.: Principles and Influence in Codes of Ethics: A Centeringy Resonance Analysis Comparing Pre- and Post-Sarbanes-Oxley Codes of Ethics, Jour- nal of Business Ethics, 80(2), 2008, p. 263-278. 5. Choi, S. H./Frye, M. B./Yang, M.: Shareholder rights and the market reaction to Sarbanes-Oxley, Quarterly Review of Economics & Finance, 48(4), 2008a, p. 756-771. 6. Cohen, D. A./Dey, A./Lys, T. Z.: Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes-Oxley Periods, Accounting Review, 83(3), 2008, p. 757-787. 7. Conyon, M. J./Peck, S./Sadler, G. V.: Compensation Consultants and Executive Pay: Evidence from the United States and United Kingdom, Academy of Management Perspectives, 23(1), 2009, p. XX. 8.Fuller, J./Jensen, M. C.: Just Say No to Wall Street, Journal of Applied Corporate Finance, 14(2), 2002, p. 41-46. 9. Gourevitch, P. A./Shinn, J.: Political Power and Corporate Control : The New Global Politics of Corporate Governance Princeton, NJ: Princeton University Press, 2005. 10. Langevoort, D. C.: Internal Controls After Sarbanes-Oxley: Revisiting Corporate Law¡®s ?Duty of Care as Responsibility for Systems¡®, Journal of Corporate Law, 31, 2006, p. 949-973.