Why Difference in Ownership Structures for Listed Companies – Civil Vs. Common Law Legal System
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Why difference in ownership structures for listed companiesCivil vs. Common Law -legal systemLegal Protection of Minority Shareholders Shareholder Value Orientation of Listed CompaniesPolitics vs Varieties of CapitalismThe ownership structure is defined by the distribution of equity with regard to votes and capital but also by the identity of the equity owners (Jensen and Meckling, 1976).Diffused ownership is when Corporate shareholders are diffused in the nature of their makeup (Financial Time, 2018).Ownership concentration refers to the amount of stock owned by individual investors and large-block shareholders (Financial Time, 2018).The country of common law- legal system adopt common law. Common law is rule on the basis of precedents. and judges make ruling based on precedentss.The country of civil law-legal system adopts civil law, like the continental Europe and developing economies. Germany and Russia is the country of civil-legal system. Civil law is rule on the basis of what is written in the statutes. If not prohibited, then can do it.Secondly, Legal protection of minority shareholders. In common law, there is legal protect the right of minority shareholders，so, the ownership structure is diffusion. In civil law, there is not legal protection the right of minority shareholders, so the ownership structure is concentration . Thirdly, the different of shareholders value orientation of listed companies. In UK and US, the shareholders value of orientation is maximizing short-term arbitrage benefits of company, the market labour is flexible, it can help them transfer the asset quickly and efficiently, so their the ownership structure is diffusion. But, in Germany and Japan, shareholders hope that the company will further develop and gains long-term profits. In Germany, there is long-term employment ad high tenure rates, so the ownership structure is concentration.
Lastly, varieties of Capitalism (Hall and Soskice, 2001) divided into liberal market economies, such as UK and USA and coordinated market economies , such as Germany and Japan and In liberal market economies and authoritarian, like Russia. Innovation带给企业的长处1.ability to take risks: risk-taking/innovative design/rapid product development based on new research552.ability to issue long-term commitments: high quality of an established product lines/ generate trust with stakeholders/continuous improvements Corporate Governance + Takeover Purpose of the corporation Shareholder value vs. stakeholder value / Value orientation of shareholder: （前面的）In UK and US: maximizing short-term arbitrage benefits of company, 选择收购 快速？Cosh, Hughes and Singh: Takeovers and Short-termism In the UK, 1990Germany and Japan；shareholders hope that the company will further develop and gains long-term profits Definition of takeover A takeover occurs when an acquiring company makes a bid in an effort to assume control of a target company, often by purchasing a majority stake in the target firm. Why takeover ?Takeover is a peed way for a firm to access another firm’s proprietary assets and then achieve the technological synergies by sharing the costs of innovation. And achieve the productive synergies by increase the economies of scale. A company may act as a bidder by seeking to increase its market share or achieve economies of scale that help it reduce its costs and, thereby, increase its profits and maintain its competitive position. However, takeover may will change the cash flow and equity structure of company, deal with the weave of takeover is an challenge.