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Financial Systems, Corporate Finance and Corporate Governance
Author(s) -
Schmidt Reinhard H.,
Tyrell Marcel
Publication year - 1997
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/1468-036x.00047
Subject(s) - corporate governance , corporate finance , order (exchange) , context (archaeology) , business , finance , capital market , financial sector , accounting , capital (architecture) , financial system , economics , history , paleontology , archaeology , biology
Financial systems of industrialised countries are usually classified as being either capital market‐ or bank‐dominated. This paper tries to shed some light on the validity of this distinction. In order to do this, it analyses two specific roles of the financial sector vis‐à‐vis the enterprise sector: the role of financing or funding business and the role of capital markets and banks, respectively, in the context of corporate governance. Our analysis of the relevant findings in the literature shows that financing patterns are quite similar between countries, while corporate governance systems are quite dissimilar. The paper discusses how these divergent findings could be made compatible with existing theories and what implications they may have for the question of whether there is a tendency for corporate governance systems in different countries to become as similar as corporate financing patterns seem to be.