The document discusses various models and theories of corporate governance. It describes four main models - the Japanese model, German model, Anglo-American model, and social control model. It also outlines six theories of corporate governance - agency theory, stewardship theory, stakeholder theory, resource dependence theory, transaction cost theory, and managerial hegemony theory. It explains the key features of each model and theory. Finally, it analyzes the relationship between the theories and models, noting that the models draw upon concepts from various theories to define organizational structures and stakeholder influences.

1. An assignment on
Critically evaluate the models of Corporate Governance and examine the
relationship between theories and models of Corporate Governance
Course: Corporate Governance & Accountability
Code: 6102
Submitted to,
Tanzina Haque
Associate Professor
Department of Accounting &Information Systems
University of Dhaka
Submitted by,
MD. Sahadat Hossain
ID: 23067
Section: B
Department of Accounting &Information Systems
University of Dhaka
Date of submission: February 17, 2022

2. The Board of Directors, which is elected by shareholders, is in charge of managing the corporate
form of business. The board of directors, in turn, hires competent managers to run the company.
Different countries have different rules, and corporate governance structures change slightly.
Models of Corporate Governance:
The following categories are used to categorize corporate governance models:
1.The Japanese Model
2. The German Model
3. Anglo-American Model
4. Social Control Model
The Japanese Approach
Banking and other financial organizations are important sources of funding for Japanese
businesses. Because banks and other institutions have such a large stake in enterprises, they
collaborate closely with the company's management. The Board of Directors and the President
are appointed jointly by the shareholders and the major banks. Lenders' interests are recognized
in this paradigm, along with the interests of shareholders.
The German Model
Corporate governance is practiced through two boards in this approach, also known as the two-
tier board model, in which the upper board oversees the executive board on behalf of
stakeholders. This method to governance is sometimes referred to as the Continental European
approach since it is the foundation of corporate governance in Germany, Holland, and, to a lesser
extent, France. Workers are considered to be one of the company's most important stakeholders,
and they should have the right to participate in its management. These are the two boards:
 Management Board: The Supervisory Board appoints and oversees the Management
Board. The Supervisory Board has the authority to dismiss and re-constitute the
Management Board.
 Supervisory Board: The members of the Supervisory Board are elected by the
shareholders. Employees also elect their Supervisory Board representatives, who make
up between one-third to half of the Board.

3. Anglo-American Model
The shareholder rights are acknowledged and valued in the Anglo-American Model of corporate
governance. They have the right to elect all members of the Board, and the Board is in charge of
the company's management. The following are some of the features of this model:
 Companies are managed by professional managers who own only a small percentage of
the company. Ownership and management are clearly separated.
 This is a model that is focused on the interests of the shareholders. It is also known as the
Anglo-Saxon approach to corporate governance, and it serves as the foundation for
corporate governance in the United Kingdom, Canada, the United States, Australia, and
the Common Wealth countries, including India.
 Directors are rarely self-sufficient from management.
 Portfolio investors are institutions such as banks and mutual funds. When they are
unhappy with the company's performance, they simply sell their stock and leave.
 The disclosure requirements are extensive, and the regulations againstinsidertrading are
stringent.
 Small investors are safeguarded, whereas large investors are discouraged from
participating in corporate governance.
Model of Social Control
The Social Control Model of corporate governance advocates for broad stakeholder participation
in the board of directors. According to this approach, establishing a Stakeholders Board in
addition to the shareholders-elected Board of Directors will improve corporate governance's
internal control systems. Shareholders, employees, major consumers, major suppliers, lenders,
and other stakeholders are represented on the Stakeholders Board.

4. Corporate Governance Theories:
There are numerous theories of corporate governance that have addressed the difficulties of
business and company governance at various times. Corporate Governance refers to the process
of making decisions and putting those decisions into action in large organizations. There are
several ideas that characterize the relationship between various stakeholders in a business when
the business is operating.
The following corporate governance theories will be discussed:
 Agency Theory
 Stewardship Theory
 The Theory of Resource Dependence
 Stakeholders Theory
 The Theory of Transaction Cost
 Theory of Managerial Hegemony
Agency Theory
The connection between principals and agents is defined by agency theory. According to this
theory, the company's owners engagethe agents to do the work. The directors or managers, who
are shareholders' agents, transfer the work of running the business to the principals. The agents
are expected to act and make choices in the best interests of the principal by the shareholders.
On the contrary, agents are not required to make decisions that are in the best interests of the
principals. The agent may succumb to self-interest and opportunistic behavior, falling short of
the principal's expectations. The separation of ownership and control is a major component of
agency theory. People or employees are held accountable in their tasks and responsibilities,
according to the theory. Agents' priorities can be corrected through rewards and punishments.

5. Stewardship Theory
The steward theory asserts that through company performance, a steward preserves and
maximizes shareholder value. Stewards are firm executives and managers who work for the
benefit of the shareholders, protecting and increasing earnings. When the organization achieves
success, the stewards are satisfied and driven. It emphasizes the importance of employees or
executives acting more independently in order to optimize shareholder returns. Employees take
responsibility for their jobs and work hard at them.
Stakeholders Theory
Stakeholder theory included management's accountability to a wide range of stakeholders. It
states that managers have a network of ties to service in their enterprises, which includes
suppliers, employees, and business partners. The idea focuses on managerial decision-making,
and all stakeholders' interests have intrinsic value, with no one group of interests thought to be
more important than the others.
The Theory of Resource Dependence
The Resource Dependency Theory examines the function of board directors in ensuring that the
firm has access tothe resources it requires. It states that through their connections to the outside
world, directors play a crucial role in delivering or acquiring essential resources to a company.
The provision of resources improves organizational effectiveness, as well as the firm's survival.
The board of directors contributes information, skills, and access to essential stakeholders such
as suppliers, customers, public policymakers, and socialorganizations, as well as credibility to the
company. Insiders, business experts, support specialists, and community influential directors are
the four categories of directors.
Transaction Costs Theory
According to transaction cost theory, a corporation has a number of contracts, either within the
company or with the market, through which it generates value. Each contract with an external
entity has a cost attached to it, which is referred to as transaction cost. If the cost of using the
market for a transaction is higher, the corporation will conduct the transaction itself.

6. The Theory of Managerial Hegemony
According to this view, the board has formal regulating power over management, but it is
dominated by management in practice.
The link between corporate governance theories and models:
The Anglo-American Approach is similar to the Agency Theory in that ownership and
management are clearly separated in this model. Every model is, in some way, tied to either
agency theory or stewardship theory. Varied models have different board structures and
shareholding patterns, but they all have a principal and agents’ relationship.
Corporate governance includes the topic of agency theory. It deals with the issue of directors
controlling a corporation while shareholders own it. The agency hypothesis outlines areas of
contention between corporate interest groups. Banks aim to minimize risk, while shareholders
want to maximize earnings in a reasonable way. As a result, agency theory and corporate
governance models are linked.
Diverse stakeholders’ impact corporate governance models, albeit the nature of these different
stakeholders' influences varies by model. As a result, these models are unmistakably linked to
stakeholder theory.
In a broader sense, analyzing the theories reveals that each one describes the activities and roles
of various stakeholders, as wellas their influence on the efficiencyof organizational activities and
performance, as well as conflicts of interest between the owner and agents, and the
interdependence of various groups in achieving organizational goals and objectives. Corporate
governance models, on the other hand, define the organizational structure in a variety of ways,
as well as the differing effects of various stakeholders in some circumstances. However, every
model employs the concept of one or more theories to describe the behavior or activities of
various actors in the pursuit of organizational goals and objectives. As a result, corporate
governance models are linked to several ideas and can be conceived of independently.