Arcilla, Khenn Joshua C.

MAR 203

Corporate governance refers to the set of principles, processes, and practices through which a
company is directed and controlled. The different models of corporate governance reflect the
different cultural, social, and political traditions of different countries. In this response, we will
expound on the different corporate governance models mentioned in the original prompt.

The Anglo-American model of corporate governance is based on the principle

of shareholder primacy. Shareholders have the right to elect the board of directors and the
board is responsible for overseeing the management of the company. Under this model,
directors are not usually independent of management and companies are run by
professional managers who have a negligible ownership stake. Institutional investors,
such as banks and mutual funds, are portfolio investors who are quick to sell their shares
if they are dissatisfied with the company's performance. The disclosure norms are
comprehensive and rules against insider trading are tight. In this model, small investors
are protected, and large investors are discouraged from taking an active role in corporate
governance.
The German model of corporate governance emphasizes the importance of
workers as key stakeholders in the company. Corporate governance is carried out through
two boards, the Supervisory Board and the Board of Management. The Supervisory
Board is elected by shareholders, and employees also elect their representatives for the
board, which is typically one-third or half of the board. The Supervisory Board appoints
and monitors the Board of Management and has the right to dismiss and reconstitute it.

The Japanese model of corporate governance reflects the country's unique

business culture and practices. Japanese companies often raise a significant part of their
capital through banks and other financial institutions, which work closely with the
management of the company. The shareholders and main banks together appoint the
board of directors and the president. In this model, the interests of lenders are recognized
along with those of the shareholders.

The social control model of corporate governance argues for full-fledged

stakeholder representation on the board. According to this model, the creation of a
Stakeholders Board, over and above the shareholders-determined Board of Directors,
would improve the internal control systems of corporate governance. The Stakeholders
Board consists of representation from shareholders, employees, major consumers, major
suppliers, and lenders, among others.
 The corporate governance model in India is a mix of the Anglo-American and
German models. There are mainly three types of companies in India: private companies,
public companies, and public sector undertakings. Each of these companies has a distinct
shareholding pattern that reflects the country's unique economic and social conditions. In
recent years, the Indian government has introduced various regulations and guidelines to
improve corporate governance in the country, such as the Companies Act, 2013, and the
Securities and Exchange Board of India (SEBI) guidelines on corporate governance.

In summary, different models of corporate governance have evolved in different

parts of the world, and each model has its own strengths and weaknesses. The Anglo-
American model is focused on shareholder rights and transparency, while the German
model emphasizes worker participation and long-term planning. The Japanese model
emphasizes stability and close relationships with financial institutions, while the social
control model emphasizes stakeholder representation on the board. In India, the corporate
governance model is a mix of Anglo-American and German models, and recent reforms
have helped in improving the corporate governance standards.

On the other hand, as I have research on the models of good governance, I believe
that these 2 models provide useful frameworks for understanding what constitutes good
governance and can be helpful in evaluating the performance of governments and
institutions. However, it's important to remember that these models are not universally
applicable and may need to be adapted to suit the specific cultural and social contexts in
which they are applied.

One of the most widely recognized models of good governance is the World
Bank's "Six Principles of Good Governance." These principles are:

 Participation: citizens should have a voice in decision-making processes

and have the ability to hold their leaders accountable.
 Rule of Law: laws should be clear, fair, and enforced impartially.
 Transparency: decisions and actions of government should be open and
accessible to citizens.
 Responsiveness: government should respond to the needs of citizens and
provide services efficiently and effectively.
 Consensus orientation: government should seek to build consensus
among stakeholders and foster dialogue.
  Equity: all citizens should have access to government services and
resources regardless of their social, economic, or political status.

Another model of good governance is the "Democratic Governance

Framework" developed by the United Nations Development Programme (UNDP). This
framework emphasizes the following core principles:

 Inclusiveness: all citizens should have equal opportunities to participate in

decision-making processes and benefit from public services and resources.
 Accountability: government officials and institutions should be held
accountable for their actions and decisions.
 Rule of Law: laws should be applied fairly and equally to all citizens and
institutions.
 Responsiveness: government should be responsive to the needs and
concerns of citizens.
 Effectiveness and efficiency: government should deliver public services
effectively and efficiently.
 Transparency: government should be transparent in its decision-making
processes and operations.
My analysis of these models is that they share many common features, including a
focus on transparency, accountability, and responsiveness. However, they also differ in
their emphasis on certain principles. For example, the World Bank model places greater
emphasis on consensus-building and equity, while the UNDP model emphasizes
inclusiveness.