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Why do corporate governance systems differ quite substantially around the world?The American model supervises managers through a board representing a diffuse mass of external shareholders whose rights are defended by a variety of institutional rules (such as those governing insider trading, antitrust, and an open market for corporate control) and by watchdog "reputational intermediaries" (such as accountants, securities analysts, and bond-rating agencies).The claims of employers, suppliers, and buyers are subordinated to shareholder rights.The German model, in contrast, supervises managers by concentrating ownership in blockholders, permitting insider relationships, allowing substantial horizontal coordination among producers, and accepting a variety of "stakeholder" claims on the firm besides those of the shareholders.
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Gourevitch et al. (2003) studied this question.
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