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Table: International corporate governance - Tentative characterizations of legal and empirical state of large firm performance monitoring systems in various countries as of 1980-1995:

 

 

Introduction: Some of the characterizations can be found in Shleifer and Vishny [1996, pages 49-55]. Precautionary statement: The first version of this table was primarily made out of memory and consequently it lacks adequate references and may contain errors about the actual legal and empirical state of the different institutions. As time passes more references will be added.

 

Tentative characterizations of legal and empirical state of large firm performance monitoring systems in developing countries as of 1980-1995

 

A) Disclosure laws.

Legal state: Weak regulation. Firms are only required to publish a very limited amount of information.

Empirical state: It is very difficult and rare to get good data about the performance of firms.

B) Laws on inside trading.

Legal state: Inside trading is legal.

Empirical state: Inside trading is the norm for the few publicly traded firms.

C) Laws on speculation.

 

Legal state: Weak regulation.

Empirical state: No other governance system is pledged with so much speculation in the public stock markets as the development countries.

Tentative characterizations of legal and empirical state of large firm performance monitoring systems in Germany as of 1980-1995

 

A) Disclosure laws.

Legal state: Low degree of transparency is demanded.

Empirical state: German firms are far more closed than firms in other governance systems are. The reason is that large German investors have power to demand the information anyway and they may benefit from keeping it inside.

B) Laws on inside trading.

Legal state: Inside trading is legal in most cases.

Empirical state: Inside trading is prevalent since most stock price change occurs prior to the news announcement.

C) Laws on speculation.

 

Legal state: Not accounted.

Empirical state: Speculation does not seem to be a big problem in German stock markets.

Tentative characterizations of legal and empirical state of large firm performance monitoring systems in Japan as of 1980-1995

 

2A) Disclosure laws.

Legal state: A semi-low degree of transparency is demanded.

Empirical state: Japanese firms publish more information about themselves than German firms but can’t beat Anglo-American firms.

B) Laws on inside trading.

Legal state: Inside trading is forbidden.

Empirical state: Inside trading is still going on since most stock price changes happen before the news goes public.

C) Laws on speculation.

 

Legal state: Tough regulation: Public trade is automatically suspended in times of dramatic price changes.

Empirical state: Speculation seems to be less of a problem in the 90s than 60 years ago.

Tentative characterizations of legal and empirical state of large firm performance monitoring systems in Anglo-American countries as of 1980-1995

 

A) Disclosure laws.

Legal state: Tough regulation: High degree of ‘transparency’ is required especially by publicly listed firms.

Empirical state: Anglo-American firms publish more information about themselves than firms from any other governance system do.

B) Laws on inside trading.

Legal state: Tough regulation: Inside trading is considered a serious crime.

Empirical state: Inside trading is still going on since most stock price changes happen before the news goes public.

C) Laws on speculation.

 

Legal state: Tough regulation: Public trade is automatically suspended in times of dramatic price changes.

Empirical state: Speculation seems to be less of a problem in the 90s than 60 years ago.

Tentative characterizations of legal and empirical state of large firm performance monitoring systems in Denmark as of 1980-1995

 

A) Disclosure laws.

Legal state: Semi-tough laws: Medium degree of transparency is demanded but they are getting tougher as time passes.

Empirical state: Danish firms are far more closed than firms in other governance systems are. The reason is that many large Danish investors have power to demand the information anyway and they may benefit from keeping it inside.

B) Laws on inside trading.

Legal state: Inside trading is illegal.

Empirical state: Inside trading is prevalent since most stock price change occurs prior to the news announcement.

C) Laws on speculation.

 

Legal state: Inside trading is illegal.

Empirical state: Inside trading is prevalent since most stock price change occurs prior to the news announcement.

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