The Corporate Governance of Multinationals

Corporate Decision-Making in Canada, R. Daniels & R. Morck (eds.) Industry Canada & the University of Calgary Press, Calgary, 1995

University of Alberta School of Business Research Paper No. 2013-900

Posted: 11 Jun 2013

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Bernard Yin Yeung

National University of Singapore - Business School

Date Written: April 27, 1994

Abstract

Globalization is a result of an increasing need for companies to access larger markets to recoup the costs associated with an increased pace of innovation in many industries. This chapter argues that globalization and multinational firms are likely to be even more important to Canada's competitive position in coming years than they have been in the past. This global competitive pressure may make many contemporary public policy concerns about corporate governance moot. In a global economy, customers, investment capital and highly skilled employees need not tolerate poor management. They can simply do business with better run rivals. Canadian firms will have to deal with their governance problems not because they are legally required to do so, but because their survival will depend on it. In this context, government's best option for improving Canadian corporate governance may well be simply to foster competition and openness while providing good legal and educational infrastructure. This entails weaning firms from subsidies and captive markets, and providing sound basic public services like education, health care and law. Some specific issues as to the governance of multinational subsidiaries in Canada do arise, especially with regard to minority Canadian shareholders. We argue that the boards of foreign subsidiaries with Canadian minority public shareholders should have conduct committees charged with approving non-arms length transactions with the parent or other related companies. Indeed, requiring this of all firms with controlling blockholders and publicly traded minority shares might solve many of Canada's corporate governance problems in one blow.

Suggested Citation

Morck, Randall K. and Yeung, Bernard Yin, The Corporate Governance of Multinationals (April 27, 1994). Corporate Decision-Making in Canada, R. Daniels & R. Morck (eds.) Industry Canada & the University of Calgary Press, Calgary, 1995; University of Alberta School of Business Research Paper No. 2013-900. Available at SSRN: https://ssrn.com/abstract=2277183

Randall K. Morck (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

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National Bureau of Economic Research (NBER)

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European Corporate Governence Institute ( email )

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Asian Bureau of Finance and Economic Research ( email )

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Bernard Yin Yeung

National University of Singapore - Business School ( email )

15 Kent Ridge Drive
BIZ 1 Level 6
Singapore, 119245
Singapore
65 6516 3075 (Phone)
65 6779 1365 (Fax)

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