The codified Roman law dominates, the legal

The Reasons for Distinctiveness Are:

i. Philosophical differences. In the US, UK, Canada and Australia, i.e., Anglo-Saxon system, management is accountable to the board and the board has to answer to the shareholders. But in Germany, France, and Japan, is an insider-oriented arrangement based on a stakeholder- friendly policy. The boards comprise of labour, banks and other constituencies of directorates.

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ii. Corporate governance is, at least partly, path-dependent requiring a systematic match with a unique institutional environment in which CG is embedded. Path-dependency depends upon the culture and institutions of the environment.

iii. Corporate governance is influenced by the legal system in which corporate governance is embedded. In countries such as France, Germany, and Argentina, in which codified Roman law dominates, the legal system associated with corporate governance tends to be concrete and comprehensive.

But the countries following common law such as the US and the UK, the law stipulates the minimum standard of behaviour expected. But in countries with a nonlegalistic orientation, the corporate governance prescribes the limits beyond which an activity or practice is unlawful.

Apart from law, the legal institutions also differ with respect to the shareholder protection. In some countries shareholders can demand names and addresses of all other shareholders for calling a special meeting, but in others they cannot. In some countries the managers must disclose their shareholding and their compensation packages, in others they do not have to.

iv. Finally, the political system is a critical determinant of prevalent standard of corporate governance, because it will reflect political philosophies and objectives.

A look at individual countries irrespective of The corporate governance system of US is actually two­fold: on the one hand, the recent NYSE initiatives are attempting to improve the degree of independence among directors of listed companies to meet corporate law; an on the other, the Sarbanes Oxley Act attempts to improve the independence of external auditors and corporate directors to meet the US Securities regulations. The US has adopted “rules-based” approach to governance, prescribing standards down to small details and enforcing these through a strong adversarial justice system.

The UK has adopted a “comply or explain” approach to governance, where practices are voluntary but disclosure is mandatory, however in recent years a large number of rules and regulations have crept into this framework. Continental Europe continues to promote social democracy and co-determination, where CG practices are designed to serve the needs of greater society, communities and stakeholders in general.

Canada has chosen to adopt a “principle-based” governance framework. Japan uses the relational-insider governance model. Culturally, the relational governance model partially ascribes to the tradition of mutual obligation, family, and consensus. In contrast to US, which has a market-based financial and governance structure, Japan has a bank-based financial and corporate governance sector.

In Hong Kong, Singapore, and Malaysia ethnic Chinese play a dominant role in local economies. In Singapore, about 80% of its listed companies by market capitalisation are controlled by ethnic Chinese.

The authority and importance of family in the firm is not compromised. In Hong Kong, too the preference is for family owned structure in contrast to diversifies shareholding model of the US. Corporate governance in China is transitional. Though the number of listed companies is increasing, but the ownership structure of listed companies is unique.

About two-thirds of the shares are not listed and are presently not allowed to be traded in the markets. Chinese stock market is often called a “policy market”, as it is influenced by government policies rather than market forces and economic factors.

However, the prominent Chinese companies on the global scene like Haier, Tsingtao, Huawei, Shanghai Automotive, Ningbo Bird, Little Swan, Chulang and Changhong want improved corporate governance. Russia has moved from centralised regime to Anglo-Saxon form of governance (since the mid-1990s), with lack of legal and institutional infrastructure, to the current practice of blending the Anglo-Saxon system with the Continental European model. Like in China, minority shareholders’ interests are not well protected in Russia.

Thus, in the US, UK, Canada, and Australia there is market-based governance opting for efficient equity markets and dispersed ownership. But, in the regions such as Hong Kong, Singapore, Malaysia, and France, the corporate governance is family-based and management and ownership tend to be combined.

Financial crises are common to all kinds of societies. Tightening of laws has not deterred people to commit frauds, crimes and manipulations against the investors and other stakeholders. Thus, what is required is change of heart.