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MODERN MODELS OF CORPORATE GOVERNANCE AND THEIR ROLE IN THE
NATIONAL ECONOMY
F.
U.Tursunov
SamIES, head of the department of
“Management”, candidate of economic sciences, associate professor
Abstract:
This article provides a comprehensive analysis of the role of corporate governance in
the national economy, advanced models from the experience of foreign countries, in particular
the Anglo-American, German, Japanese and family models. The specific features, advantages
and weaknesses of each model, as well as the possibilities of their implementation in the
conditions of Uzbekistan, are considered.
Keywords:
corporate governance, joint-stock company, Anglo-American model, German model,
Japanese model, family model, modern management.
Introduction.
Corporate governance today plays an important role in ensuring the efficiency of
joint-stock companies, strengthening financial stability and increasing investment attractiveness.
Corporate governance is understood as a system that manages relations between managers, the
board of directors, shareholders and other stakeholders. This system creates the necessary
foundations for the long-term sustainable development of the company.
Today, the role of modern corporate governance in joint-stock companies in our national
economy is very important, because the principles and models of corporate governance make a
huge contribution to the processes of efficiency and high profitability in joint-stock companies.
Therefore, our government is developing various resolutions, projects and programs for the
development of this sector. By the Decree of the President of the Republic of Uzbekistan No.
PF-60 dated January 28, 2022 "On the Development Strategy for the Further Development of the
Republic of Uzbekistan", in order to further increase the well-being of our people, transform
economic sectors and rapidly develop entrepreneurship, unconditionally ensure human rights and
interests, and establish an active civil society, the following was approved: "The Development
Strategy for the Development of New Uzbekistan in 2022-2026 in seven priority areas was
approved.
Today, the study of mature and modern experience and formed skills in corporate governance
practice in the world is one of the pressing issues. There are various models of corporate
governance in world practice. Each country forms a corporate governance model based on its
own characteristics. All corporate governance models in the world are based on three different
models. Corporate governance is such a concept that it includes managers, the board of directors,
shareholders and persons interested in managing the company It represents a system of
interactions between the founders and the company. Such a system affects not only the founders'
income, but also the company's future investments.
Main part.
The first model is the Anglo-American or outsider model, a management model of a
joint-stock company based on a high level of corporate control over the joint-stock company or
the use of external market mechanisms of control over the management of the joint-stock
company. Such a management model is typical for countries such as the USA, Great Britain,
Canada, New Zealand. In this case, the interests of shareholders are manifested in a large
number of investors, which exist in connection with the management of the joint-stock company,
which differ from each other.
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The actual management of a joint-stock company is carried out by professional managers. The
main problem in applying this model is the problem of interaction between the founders of the
joint-stock company and the managers involved. In such conditions, of course, the role of the
stock market, which plays an important role in exercising control over the management of the
joint-stock company, increases even more. The main participants are managers, directors (board
of directors) and investors. Also involved are government agencies, stock exchanges, self-
regulatory bodies, consulting firms that provide advisory services to corporations and investors
on corporate governance and voting trust.
Of the countries implementing the Anglo-American model of corporate governance, the United
States demonstrates the most stringent standards of information openness. In other countries that
use this model, the level of information disclosure is also high, but in the United States,
corporations are required to publish various information once a quarter. Also, the following
information must be included in the annual report or annual general meeting of shareholders:
The main principles of the Anglo-American model of corporate governance include:
• separation of property and obligations;
• separation of property rights and control over the corporation;
• a sufficient condition for “increasing the welfare of the joint-stock company” is the behavior of
maximizing wealth;
• maximizing the market price of shares is maximizing the wealth of shareholders;
• all shareholders have equal rights;
The outsider (foreign) model is a model of joint-stock company management in the foreign
market with a high level of control or corporate control mechanisms.
The continental (German) or insider model is a model of joint-stock company management,
implemented with priority given to the use of internal methods of corporate control or self-
control methods. “The German model of corporate governance is also characteristic of Central
and Western European countries (Germany, the Netherlands, Switzerland, Austria, Norway,
Scandinavian countries, Belgium and France). It is based on the principle of social interaction:
all interested parties in the activities of a joint-stock company (shareholders, managers,
employees, banks, public organizations) have the right to participate in the decision-making
process.
The German model is characterized by a weak focus on stock markets and shareholder value in
management, since in this case the company itself controls its competitiveness and performance.
" "A number of objective and subjective factors influenced the formation of this model. Among
them, it is necessary to highlight, first of all, the high level of concentration of share capital,
which ensures the leading role of banks in corporate decision-making and is characterized by the
placement of a relatively small part of their shares in the hands of private investors. For example,
in large companies, more than 40% of the shares are held by the 5 largest shareholders.
Accordingly, the stock market in Germany is considered to have somewhat lower liquidity than
in the USA and Great Britain. For this reason, the continental model is characterized by a
somewhat higher level of ownership concentration and the presence of strategic investors with a
blocked share package, in which banks play a major role. In recent years, the influence of
foreign investors on management based on the German model has been increasing.
The Anglo-American and German models of corporate governance represent two mutually
contradictory systems, reflecting the national characteristics of a particular country and
consisting of many options based on the leading priorities of one or another system. The
development of a particular model of corporate governance within the framework of the national
economy mainly depends on the following three factors: - the mechanism for protecting the
rights of shareholders; - the functions and tasks of the board of directors; - the level of
information disclosure. The Japanese model of corporate governance emerged in the post-World
War II financial and industrial formed on the basis of groups (keiretsu), influenced by the
political and economic conditions, culture and traditions of the country, and characterized by a
completely closed system based on bank control, which allows to reduce the problems of control
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of managers. The Japanese model of corporate governance is multifaceted and is formed around
the main (leading) bank and the financial and industrial group (network) or keiretsu. “The main
bank and keiretsu are two different, but complementary elements of the Japanese model.
Practically all Japanese corporations have close relations with their main banks. The bank
provides loans to its corporate clients, issues bonds and shares, and provides account
management and consulting services. This model is characterized by the accumulation of a large
part of the property of companies included in the “keiretsu” in the hands of large and medium-
sized shareholders who own shares.
That is, 70% of the shares of joint-stock companies belong to financial institutions, but
monitoring of the company's activities is carried out not only by their shareholders, but also by
the main bank, which is considered a major creditor. Typically, keiretsu is organized around one
large bank that can provide financing for all companies of the financial and industrial group. The
composition of the board of directors of Japanese corporations is larger than in the USA, Great
Britain or Germany, and consists of an average of 50 members. If the corporation's profits
decrease over a certain period of time, the main bank and keiretsu members can dismiss directors
and nominate their own candidates can appoint.
Another custom typical for the Japanese state is the inclusion of retired heads of various
ministries and departments in the board of directors of a corporation. For example, the Japanese
Ministry of Finance may appoint a retired head as a member of the board of directors of a bank.
In the Japanese model, the composition of the board of directors depends on the financial
condition of the corporation. Due to changes in the legislation in the country in recent years, the
Japanese model of corporate governance has begun to have a negative impact on effective
development. The reason is that due to the increase in foreign institutional investors in the
country, Japanese companies have become more oriented towards the market, shareholders, and,
in addition, the Anglo-American model. The family model of corporate governance is
distinguished by its widespread distribution in all countries of the world (mainly in Asian and
Latin American countries, Canada, Sweden, Italy and France). In this case, the corporation is
managed by members of one family. The capital of the corporation is concentrated and
distributed through family channels, and control over the movement of the corporation's business
and financial resources is completely owned by the family (for example, the Wallenbergs in
Sweden, the Anellis in Italy, the Bronfmans in Canada, the Li Kai-shi dynasty in Taiwan are
examples of this). In some cases, investors can be attracted to family businesses, but they do not
have a majority vote in corporate governance. Such shares can also be issued through listing on a
stock exchange. If all the shares of a joint-stock company belong to one voter, then family-
owned shares provide additional advantages (for example, exclusive rights in electing members
of the board of directors). Such a tool allows you to control the activities of a joint-stock
company without having a large shareholding.
According to some researchers, family companies are an outdated way of accumulating capital
and are not considered an effective form of doing business. However, data show that in
industrialized countries, from 45% to 75% of GDP is accounted for by family companies. In
addition, family companies, compared to companies with a large number of owners, operate for
a longer period of time. In world practice, the experience of four existing models of corporate
governance in joint-stock companies differs from each other in the manifestation of their specific
features in practice and the mechanism of their operation. Based on the research conducted, a
comparative analysis of the advantages and disadvantages of the use of these models was carried
out.
In order to improve the corporate governance system in the conditions of Uzbekistan, it is
important to select and adapt foreign best practices. Each model has its advantages, but none of
them is a universal solution. Therefore, it is advisable to create hybrid management models,
taking into account national economic, legal and cultural factors.
Conclusion
. Effective implementation of a corporate governance system not only ensures the
financial stability of joint-stock companies, but also contributes to the competitiveness and
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international integration of the national economy as a whole. Therefore, it is urgent to improve
the legislative and institutional framework for corporate governance in Uzbekistan, and to use
foreign experience.
References:
1. Decree of the President of the Republic of Uzbekistan No. PF-60.
.
2. Kenjayeva U.F., Urinov B.N. Formation of the corporate governance system in joint-stock
companies and stages of its development in Uzbekistan. "Economics and innovative
technologies". Issue 3, 2022.
3. Ashurov Z.A., Jalilov F.A., Urinov B.N. Modern corporate governance (foreign experience).
T.: Economics, 2021. – 195 p.
