Corporate Governance Practices of Boeing, Honda & Daimler
Melbourne, May 2014
TABLE OF CONTENTS
Characterised by nation-specific features and different regulatory systems, the use of corporate governance mechanisms varies across different countries in the world. This paper will help investigate those differences by examining the current corporate governance practices of three different companies representing for three powerful countries namely Japan,…show more content… Most of them have been working and responsible for different departments in Daimler (Daimler AG 2013). The Supervisory Board which monitors and advises the Board of Management with regard to its management of the Company has twelve out of twenty outside directors, who are accountable for focal positions in big corporations such as Deutsche Bank Foundation, Nokia Corporation, Nestle, Avon, IG Metall, etc.
The size of the board of directors: Hermalin and Weisbach (2003) supposed that the board size is negatively related to both general firm performance and the quality of decision making. However, complex firms such as those that are diversified across industries, large in size, or have high leverage are more likely to benefit from a larger board of directors, particularly from outside directors who possess relevant experience and expertise (Jeffrey L. et al. 2008). Therefore, the board size of Boeing with eleven directors in which ten is independent and one is non-independent seems to be the optimum size. Honda has followed the same pattern with Boeing when it announced plans to downsize from twenty to twelve board members in 2011 so that its decision making process will be shortened. Accordingly, the number of board members of Honda is thirteen in 2013 (Honda 2013). Daimler, however, owns a big size of board members because it follows the two-tier board system. The Board of