Posts Tagged ‘Globalization’

Corporate Governance and the Erosion of Deutschland AG

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday August 13, 2014 at 9:00 am
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Editor’s Note: The following post comes to us from Wolf-Georg Ringe, Professor of International Commercial Law at Copenhagen Business School.

The conventional view in comparative corporate governance research holds that German corporations are characterized by the prevalence of large blockholders, making it the typical example for a system of concentrated ownership. In my recent paper, Changing Law and Ownership Patterns in Germany: Corporate Governance and the Erosion of Deutschland AG, which has been made publicly available on SSRN, I show that the traditional ownership patterns in German corporations are currently undergoing a major change. The old “Deutschland AG”, a nationwide network of firms, banks, and directors, is eroding along three dimensions: the concentration of ownership is diffusing, the role of banks in equity participations is weakening, and the shareholder body is becoming increasingly international. It appears that these changes are more pronounced the larger the corporation. I present new data to support these developments and explore the consequences in governance and in law that have been taken or that need to be drawn from this finding.

…continue reading: Corporate Governance and the Erosion of Deutschland AG

Comparative Company Law: Case Based Approach

Posted by June Rhee, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Friday May 24, 2013 at 9:16 am
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Editor’s Note: The following post comes to us from Mathias Siems of Durham University and David Cabrelli of Edinburgh University, UK.

There has been an exponential growth in interest in comparative company law in recent years. For example, in the period from 2002 to 2011, no fewer than ten monographs or edited collections were published exploring this new field of enquiry. The burgeoning literature was mirrored by an increase in University Postgraduate courses or programs in comparative company law and corporate governance. Moreover, the dissolution of trade barriers and mass cross-border capital flows engendered by the forces of competition and globalization have necessitated legal practitioners to be conversant with the company laws of jurisdictions other than their own.

In Mathias Siems and David Cabrelli (eds.), Comparative Company Law: A Case Based Approach, Hart Publishing, 2013 (publisher’s website; introduction on SSRN) we have aimed to fill an important gap in this field. Existing books on comparative company law tend to focus on the institutional structure of the corporation but this approach risks overlooking specific cases and how the issues arising from disputes are resolved in different jurisdictions. For example, topics related to directors’ liability, creditor protection and shareholders’ rights may best be understood by analyzing how selected hypothetical cases would be solved in different countries.

…continue reading: Comparative Company Law: Case Based Approach

Regulation in a Global Financial System

Posted by Mary Jo White, Chair, U.S. Securities and Exchange Commission, on Friday May 10, 2013 at 9:52 am
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Editor’s Note: Mary Jo White is Chair of the U.S. Securities and Exchange Commission. This post is based on Chair White’s remarks at the Investment Company Institute (ICI) General Membership Meeting, which are available here. The views expressed in this post are those of Chair White and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

It should rapidly become clear that my remarks belong only to me because I will be talking about the role of the SEC in an increasingly global financial and regulatory system from the viewpoint of a Chair on Day 18 of her tenure. Already, I find myself emphasizing to some outside the agency that the international aspect of the SEC’s role is not a distraction from our important core domestic duties. Rather, that role must be understood in order to fully appreciate the agency’s whole mission – to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation.

And it’s how we’re furthering that mission through our international efforts that I will speak about today.

…continue reading: Regulation in a Global Financial System

Emerging Challenges for Regulating Global Capital Markets

Posted by Daniel M. Gallagher, Commissioner, U.S. Securities and Exchange Commission, on Wednesday March 27, 2013 at 3:00 pm
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Editor’s Note: Daniel M. Gallagher is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on Commissioner Gallagher’s keynote address at the Symposium on Building the Financial System of the 21st Century: An Agenda for Europe and the United States. The full text, including footnotes, is available here. The views expressed in the post are those of Commissioner Gallagher and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

We in America have been blessed with a wonderful combination of geography, natural resources, and free market principles. These and other factors have allowed our economy and our financial system, including our capital markets, to thrive in the post-World War II era.

Although the United States has suffered its share of financial crises, most recently the one that erupted in 2008, our free market economy and robust capital markets have conferred an enviable prosperity on our people over a period of many years, and few in America can remember a time when the United States did not have strong and competitive capital markets.

However, the very strength and resilience of our capital markets could lead us to fall into the trap of believing that we are somehow entitled to such prosperity. Indeed, such a sense of complacency may well have taken root in our government and may threaten to jeopardize that prosperity. The reality is that we live in a world in which we must be constantly vigilant — sometimes taking affirmative action, but more often choosing not to act — in order to preserve the vitality of our markets.

An important part of my job, and that of my colleagues on the Commission, is to ensure that America’s capital markets remain strong, vibrant, and competitive. That’s not just good for U.S. investors, but also for other investors around the world. And, conversely, the rise of robust capital markets in other parts of the world has the potential to benefit the United States and the American people as well.

…continue reading: Emerging Challenges for Regulating Global Capital Markets

Complexities of Capital Markets Regulation

Posted by Daniel M. Gallagher, Commissioner, U.S. Securities and Exchange Commission, on Thursday March 7, 2013 at 10:04 am
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Editor’s Note: Daniel M. Gallagher is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on Commissioner Gallagher’s keynote speech at the 7th Gulf Cooperation Council Regulators’ Summit in Doha, Qatar; the full speech, including footnotes, is available here. The views expressed in the post are those of Commissioner Gallagher and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

We in America often remark that we are blessed by our geography. And there is no doubt that Qataris feel the same about this incredibly unique and beautiful country. In the United States during the post World War II era, our geographical position and natural resources helped our economy develop while others experienced severe disruptions, particularly in Europe. That promoted the development of our capital markets to the great benefit of our citizens, as well as investors foreign and domestic and our partners-in-trade around the world.

It is certainly true that we have suffered our share of economic and financial crises, most recently the crisis that erupted in 2008. Even so, our free market economy and robust capital markets have conferred an enviable prosperity on our people over many years. Indeed, notwithstanding financial crises large and small, it is fair to point out that few in America can remember a time when the United States did not have strong and competitive capital markets.

The risk, however, is that the very resilience of our capital markets has, over time, fostered a latent complacency — a tendency to think strong and competitive markets are, somehow, ours by right — that we are entitled to them when, in reality, we must constantly act — and sometimes decide not to act — in order to preserve the vitality of our markets.

An important part of my job, and that of my colleagues on the Commission, is to ensure that America’s capital markets remain strong and competitive. That’s not just good for U.S. investors, I submit, but equally good for others — for all of you. And, of course, rising global markets are good for the United States.

…continue reading: Complexities of Capital Markets Regulation

New Board Challenges for Global Governance

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Saturday February 2, 2013 at 8:07 am
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Editor’s Note: The following post comes to us from Wayne Lord, president of the World Affairs Council of Atlanta. This post is based on a white paper report from the 2012 Global Strategic Leadership Forum by Dr. Lord, available here.

The second set of meetings in the World Affairs Council of Atlanta’s Global Strategic Leadership Forum series focused on the new challenges facing the boards of directors of contemporary global companies. Setting the stage for the Forum’s discussions was the recognition of the huge changes that have taken place as a result of globalization in tandem with the world financial crisis and economic slow-down. The premise of the Forum was that the expanding and complex issues facing global companies today require a re-examination of the wide set of risks generated by global expansion and the complicated and dynamic matrix of the regulatory environment. These developments have dramatically impacted the relationship between the board and the chief executive officer as they determine strategic direction for the company – a role that is increasingly becoming a joint responsibility.

The general consensus of the Forum’s participants was that in today’s business environment, a global company board needs to ask itself if it is doing all it can and should to evaluate the complicated new risks facing the company, while ensuring that the goals for growth and profitability remain a critical focus. Complicating this escalating level of risk are the increasingly onerous and complex regulatory frameworks, imposed not only by the United States, but by other sovereign jurisdictions. The Forum participants confirmed that many of these regulations have global reach and the Board of Directors has specific oversight responsibility, thus vastly increasing the amount of information that must be examined at the Board level.

…continue reading: New Board Challenges for Global Governance

Financial Globalization and the Rise of IPOs Outside the U.S.

Posted by René Stulz, Ohio State University Fisher College of Business, on Monday December 3, 2012 at 8:44 am
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Editor’s Note: René Stulz is Professor Finance at Ohio State University.

In the paper, Financial Globalization and the Rise of IPOs Outside the U.S., which was recently made publicly available on SSRN, my co-authors (Craige Doidge and George Karolyi) and I document dramatic changes in the IPO landscape around the world over the past two decades. U.S. IPOs have become less important and IPOs in other countries have become more important, whether one looks at counts or at proceeds. In fact, U.S. IPO activity has generally not kept pace with the economic importance of the U.S. We show that financial globalization plays a critical role in facilitating the increasing importance of IPOs by non-U.S. Firms.

…continue reading: Financial Globalization and the Rise of IPOs Outside the U.S.

Investor Protection through Audit Oversight

Posted by Noam Noked, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday October 10, 2012 at 9:08 am
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Editor’s Note: The following post comes to us from Lewis H. Ferguson, board member of the Public Company Accounting Oversight Board. This post is based on Mr. Ferguson’s remarks at an SEC Financial Reporting Conference. The views expressed in this post are those of Mr. Ferguson and should not be attributed to the PCAOB as a whole or any other members or staff.

Anyone involved in the financial reporting process deals daily with the hard realities of complexity and rapid change — whether you are a preparer of financial statements, a board or audit committee member, an investor, an independent or internal auditor, a counselor, or a regulator.

Commercial activity is increasingly global. Some financial instruments and transactions are bafflingly complex with values that can only be estimated. Standard setters in the United States and abroad are moving away from historical cost accounting toward fair value accounting, requiring difficult estimates. There is a plethora of new rules and requirements growing out of the Dodd-Frank and JOBS acts in the United States, and all of this is happening in what since 2008 has been the most difficult global economic environment since the Great Depression of the 1930s.

Much as we struggle with these rapid changes and their complexity, regulators also struggle to see around the curve, to be prepared for what is coming tomorrow, and to have tools in their toolbox that will be appropriate for those challenges. In the next session of today’s conference, I will discuss a number of specific initiatives the PCAOB is undertaking to deal with some of these challenges, but in this address I want to focus on one specific area, the challenge of globalization and cross-border financial reporting, auditing and audit oversight.

…continue reading: Investor Protection through Audit Oversight

Cross-Border Application of Dodd-Frank Swaps Market Reforms

Posted by Gary Gensler, Chairman of the Commodity Futures Trading Commission, on Tuesday June 12, 2012 at 9:21 am
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Editor’s Note: Gary Gensler is chairman of the Commodity Futures Trading Commission. This post is based on Chairman Gensler’s remarks before the 2012 FINRA Annual Conference, available here.

I would like to focus my remarks on swaps market reform and specifically on how it fits into the international context.

International Swaps Market – Historically Unregulated

As you all know, with just the click of a mouse, risk can spread around the globe. We surely saw this as the financial system failed in 2008.

As the financial system failed in 2008, most of us learned that the insurance giant AIG had a subsidiary, AIG Financial Products, originally organized in the United States, but run out of London. The fast collapse of AIG, a mainstay of Wall Street, was again sobering evidence of the markets’ international interconnectedness. Sobering evidence, as well, of how transactions booked in London or anywhere around the globe can wreak havoc on the American public.

Swaps, now comprising a $700 trillion notional global market, were developed to help manage and lower risk for commercial companies. But they also concentrated and heightened risk in international financial institutions. And when financial entities fail, as they have and surely will again, swaps can contribute to quickly spreading risk across borders.

Leading up to the financial crisis, swaps were basically not regulated in Asia, Europe or the United States.

There were many reasons put forth as to why swaps should not be regulated. Let me touch upon just three of those reasons, as I believe they are relevant to today’s ongoing debates about the proper role of financial regulation.

…continue reading: Cross-Border Application of Dodd-Frank Swaps Market Reforms

Analyzing Global Proxy Voting Practices

Posted by Michael McCauley, Florida State Board of Administration, on Saturday April 14, 2012 at 9:10 am
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Editor’s Note: Michael McCauley is Senior Officer, Investment Programs & Governance, of the Florida State Board of Administration (the “SBA”). This post is based on an excerpt from the SBA’s 2012 Corporate Governance Report by Mr. McCauley, Jacob Williams and Lucy Reams. Mr. Williams and Ms. Reams are Corporate Governance Manager and Senior Corporate Governance Analyst, respectively, at the SBA.

Fiscal year 2011 witnessed the SBA’s shift from domestic and foreign asset classes, to a combined global equity portfolio, with a heavier international equity weighting and a more balanced U.S. exposure. With the recent structural changes, the proportion of SBA assets invested in foreign equity markets will continue to rise, and a significant proportion may be managed internally. In 1998, for foreign equities was 7.6 percent, rising to 12.7 percent by 2003, and 18.8 percent by the end of fiscal year 2010. Upon completion of the transition to a combined global equity asset class, foreign equities composed 33 percent of FRS assets as of October 2011. As a percent of the equity asset class, foreign shares account for 56 percent and U.S. shares for 44 percent.

Coinciding with this shift, the SBA realigned its international proxy voting practices, bringing foreign voting decisions ”in-house” to match domestic SBA voting practices.

Previously, external asset managers were responsible for voting international proxies associated with SBA shares held in their funds. Since the SBA assumed this responsibility, votes are now cast by SBA staff—based on our own Corporate Governance Principles & Proxy Voting Guidelines and meeting specific research from our proxy research providers.

…continue reading: Analyzing Global Proxy Voting Practices

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