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Corporate governance and globalization

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Corporate governance is concerned with the institutions that influence how business corporations allocate resources and returns. There is growing interest in pressures on national systems of corporate governance to convere that are allegedly being generated by the process of globalisation, especially the global integration of financial markets. Advocates of the merits of globalisation contend that the trend will lead to a more efficient allocation of capital. Drawing on the examples of the US, Germany and France, the author argues that considerable change has indeed occurred in national governance systems. These changes cannot be understaood, however, as the outcome of a market-driven, efficiency enhancing process that is autonomous of political interests. Rather realignments in corporate governance reflects the growing economic and political power of those who have accumulated financial assets, a trend that is closely related to the extent of population ageing and the social arrangements for pension provision in domestic economies as the author shows in the cases of the US and Germany. Domestic developments in certain national systems of corporate governance, most notably in the US and Britain, have generated international pressures for change in other corporate governance systems. As the author illustrates with the case of France, an analysis of the structure of interests in the domestic corporate economy is alos an important prerequisite for understanding the effects of these international pressures.

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