Capital Structure Decisions Along the Supply Chain: Evidence from Import Competition

Abstract

This thesis comparatively analyzes the corporate governance rules of the publicly owned corporations in Germany and Ethiopia. Stock corporations in Germany follow the ‘two-tier’ board structure composed of supervisory board and management board whereas the boards of directors of share companies in Ethiopia adopt a single tier board of directors. Employees participate in the supervisory board of stock corporations in Germany in the form of codetermination. However, the concept of employees’ representation in corporate boards is unknown to the Ethiopian company law. The shareholders meetings are called in both jurisdictions to pass resolutions on important affairs of a company. Yet the scope of their powers varies across these two jurisdictions. The role of auditors in examining the financial flaws of companies is another important aspect of corporate governance in both jurisdictions and it will be comparatively studied. It is true that two jurisdictions can hardly have the exact same rules of corporate governance. Contrast to the literally imported rules of corporate governance in Ethiopia, Germany has legal regimes developed in its own environment. Ethiopia is on the verge of revising its old Commercial Code that is believed to have lagged behind the modern developments in corporate laws. It is expected that the experts in charge of the revision will consider corporate laws of foreign advanced economies such as Germany. The thesis will thus examine the differences and similarities between the rules of corporate governance of Germany and Ethiopia by focusing on the three important organs of public corporations: board of directors, shareholders meetings and auditors. Finally, what rules Ethiopia could possibly borrow from the corporate governance rules of Germany will be shown. The existing rules of corporate governance that Ethiopia should keep with slight or no modifications will also be identified.