Week 2: Corporate Governance

Question 1

Zysman 1994

Answer 1

Model of institution led growth, institutions such as government and financial markets determine the way firms develop.

Question 1

Edwards and Nibler 2000

Answer 1

In UK, Germany, individual owners have large stakes in firm so costs of monitoring are slightly internalized, reducing free-rider problem.

Question 2

Holderness 2009

Answer 2

Claims diffuse ownership in the U.S. is a myth. 96% of firms have block holders, owning on average 39% of common stock.

Question 4

Roe 2000

Answer 4

“Tying managers tightly to shareholders has been central to American corporate governance” European systems had lots of family owned firms. Governments support employees, not owners → managers more interested in welfare than profit. American firms are public → social democratic forces are less strong.

Question 5

Dore et al. 2013

Answer 5

Britain: Family controlled. Managers were shareholders, generally owners or recruited from upper class. Technical specialists never become mananagers U.S.: Divorce of ownership and management. Company stock was widely held and salaried managers ran companies. Technical specialists could rise up the ladder. Germany: More family based than U.S, but inheritors more likely to be technical than in UK. Hausbanks fulfilled a venture-capital role. Japan: State investment created large-scale businesses, which were then given to Zaibatsu (diversified, family-controlled vertical monopolies). Managerial control.

Question 6

Franks and Mayer 1995

Answer 6

Concentration of ownership in German firms far higher than UK firms.

Question 7

Means 1930

Answer 7

Free rider problem in US: “ever fewer stockholders had any interest in exercising their ownership rights to monitor corporate managers.”