Corporate Governance in Germany and the US

Essay from the year 2013 in the subject Politics - General and Theories of International Politics, grade: 1,3 (German Grading System), University of Washington, language: English, abstract: After scandals like Enron in the past years, companies have been pressured to establish Corporate Governance systems to control their management. The design of these systems is often determined on a national level, but varies substantially from country to country. This paper deals with the different systems of Corporate Governance in the United States and Germany and establishes a comparison. The focus is put on how the German system is different from that of the US. At the end, recent developments in the Corporate Governance landscape are discussed. To begin with, it is important to understand what Corporate Governance means. It is defined as 'The system of rules, practices and processes by which a company is directed and controlled'. These rules, practices and processes are supposed to achieve values like integrity, transparency and fairness. Thereby, Corporate Governance can support a corporation to 'fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term'. Furthermore, it strengthens a company's reputation and has shown to increase share prices by establishing trust. Potential investors, who might not be familiar with a corporation's processes and controlling practices in detail, can rely on statutory monitoring systems.