Corporate Governance: Law, Economics & Politics
Professor: Douglas Nelson
Office: Tilton 108 (Murphy Institute), Phone: 865-5317
Office Hours: Tuesday and Thursday, 3:30-5:30
Phone: 865-5317
email: dnelson@tulane.edu
Webpage: http://www.tulane.edu/~dnelson/
Much of modern political economy, and the political economy of globalization in particular, focuses on labor markets. This literature recognizes the fundamental importance of financial markets, but does so in an essentially ad hoc way. In this course we try to build toward an analysis of globalization focused on financial markets and corporate governance. Thus, we will begin with the firm and it’s relationship to financial markets. In the second part of the course we take a comparative perspective on corporate governance that draws on research in comparative law, economics and politics. We will conclude with analysis of the effects of globalization.
Readings for the course will be drawn from a large number of articles, available online, and:
Frank Easterbrook and Daniel Fischel (1991). The Economic Structure of Corporate Law. Boston: Harvard University Press. [Easterbrook and Fischel]
Xavier Vives, ed. (2006). Corporate Governance: Theoretical and Empirical Perspectives. Cambridge: CUP. [Vives]
Mark Roe (2003). Political Determinants of Corporate Governance. Oxford: OUP. [Roe]
Peter Gourevitch and James Shinn (2005). Political Power and Corporate Control: The New Global Politics of Corporate Governance. Princeton: PUP. [Gourevitch & Shinn]
Required readings are marked on the syllabus by a “►”.
Surveys and Textbooks: There have been a large number of survey articles and textbooks
related to the material we will cover in this course. Among the best are:
Paul Milgrom and John Roberts (1988). “Theories of the Firm: Past, Present and Future”.
Canadian Journal of Economics; V.21-#3, pp. 444-458.
Bengt Holmström and Jean Tirole (1989). “The Theory of the Firm”. In Richard
Schmalensee and Robert Willig, eds. Handbook of Industrial Organization, Vol. 1.
Amsterdam: North Holland, pp. 61-133.
Oliver Williamson (1989). “Transaction Cost Economics”. In Richard Schmalensee and
Robert Willig, eds. Handbook of Industrial Organization, Vol. 1. Amsterdam: North
Holland, pp. 135-182.
Roy Radner (1992). “Hierarchy: The Economics of Managing”. Journal of Economic
Literature; V.30-#3, pp. 1382-1415.
Gibbons, Robert. 2005. “Four Formal(izable) Theories of the Firm?” Journal of
Economic Behavior & Organization, 58(2), 200-45.
Milton Harris and Arthur Raviv (1991). “The Theory of Capital Structure”. Journal of
Finance; V.46-#1, pp. 297-355.
Andrei Shleifer and Robert Vishny (1997). “A Survey of Corporate Governance”. Journal
of Finance; V.52-#2, pp. 737-783.
Jean Tirole (1999). “Incomplete Contracts: Where Do We Stand?”. Econometrica; V.97-#4, pp. 741-781.
Luigi Zingales (2000). “In Search of New Foundations”. Journal of Finance; V.55-#4,
pp. 1623-1654.
John Cioffi (2000). “State of the Art: A Review Essay on Comparative Corporate
Governance”. American Journal of Comparative Law; V.48-#3, pp. 501-534.
Richard Lambert (2001). “Contracting Theory and Accounting”. Journal of Accounting
and Economics; V.32-#1-3, pp. 1-87. [comment by Magee]
Robert Bushman and Abbie Smith (2001). “Financial Accounting Information and
Corporate Governance”. Journal of Accounting and Economics; V.32-#1-3, pp. 237-333.
[comment by Sloan]
Peter Gourevitch (2002). “The Politics of Corporate Governance Regulation”. Yale Law
Journal; V.112-#7, pp. 1829-1880.
Marco Becht, Patrick Bolton and Ailsa Röell (2003). “Corporate Governance and
Control”. In G.M. Constantinides, M. Harris, and R. Stulz, eds. Handbook of Economics
and Finance. Amsterdam: Elsevier, pp. 1-109.
Jeremy Stein (2003). “Agency, Information and Corporate Investment”. In G.M.
Constantinides, M. Harris, and R. Stulz, eds. Handbook of Economics and Finance.
Amsterdam: Elsevier, pp. 111-165.
Paul Milgrom and John Roberts (1992). Economics, Organization and Management.
Upper Saddle River, NJ: Prentice Hall.
Kevin Keasey, Steve Thompson, and Michael Wright (2005). Corporate Governance:
Accountability, Enterprise, and International Comparisons. Wiley.
Thomas Copeland, J. Fred Weston and Kuldeep Shastri (2005). Financial Theory and
Corporate Policy. Boston: Pearson/Addison Wesley.
Patrick Bolton and Mathias Dewatripont (2005). Contract Theory. Cambridge: MIT
Press.
Jean Tirole (2006). The Theory of Corporate Finance. Princeton: PUP.
Evaluation: Your performance in this course will be evaluated on the basis of 10 analytical
comments (worth 100 points total); and 1 analytical review essay (worth 100 points). To receive
an A, you must earn at least 90 percent of the points available. To pass the course you must earn
at least 60 percent of the points available. Grades between these limits will be determined on the
basis of your performance relative to that of the class as a whole.
Policy on analytical comments. The analytical comments are written assignments consisting of
two parts: a comment on the assigned reading for the week (7 of 10 points); and 5 questions
raised by the assigned reading for the week (3 of 10 points). The comment should be about 3
double-spaced pages long. Do not waste time summarizing the reading. The goal is to identify
some aspect of the reading that strikes you as particularly interesting and to explain why you find
it interesting. The questions should identify things you would like to see discussed in class. The
comments are due on, or before, the start of the class in which the material is discussed. Late
comments will not be accepted.
Review essays. Every member of the class is required to produce a review essay on one of the
major topics in law & economics or political economy (i.e. Topics III-V, not theory of the firm).
Broadly speaking, I expect papers in the 20-25 page range [if you have picked a topic that can be
effectively exhausted in 10-15 pages, you have picked too narrow a topic]. These papers will
involve extensive review of the literature on one of the major topics (involving, but not limited
to, the non-required readings on the topic). A grade in the A-B range [i.e. 80-100] can only be
earned by a paper that provides a synthesis of the literature under review. That is, if you only
summarize the literature the best grade you can earn will be a C [note well: this is a maximum,
you can earn a lower grade by doing a bad job of summarizing.]
To ensure that topics are well-established and suitable for the course, I require a proposal
due no later than 4 October. Late proposals will result in a 10 point penalty to be assessed on the
paper’s final score. If you change your paper topic without my approval, 20 points will be
deducted from your final mark. Review essays are due at the last regular meeting of the course (6
December). Late papers will not be accepted, and will earn a score of 0 points.
These papers must be original work, plagiarism will not be tolerated. This includes:
unattributed appropriation of someone else’s work; and excessive use (whether or not attributed)
of a secondary source [including, in particular, any of the above survey articles.] If you are
unclear as to what constitutes plagiarism, consult the Tulane University Honor Code on
plagiarism.
Economics 4980-04 SYLLABUS Fall 2011
Topic I. Course Introduction
► Vives, (2000). “Corporate Governance: Does it Matter?”. Chapter 1 in Vives.
► Gourevitch & Shinn, Chapter 1
Topic II. Basic Economics of the Firm and Corporate Governance
● Transaction Costs and the Firm
► Ronald Coase (1937). “The Theory of the Firm”. Economica; V.4-#16, pp. 386-405.
► Oliver Williamson (2002). “The Theory of the Firm as a Governance Structure:
From Choice to Contract”. Journal of Economic Perspectives; V.16-#3, pp. 171-195.
► Mark Granovetter (1985). “Economic Action and Social Structure: The Problem
of Embeddedness”. American Journal of Sociology; V. 91-#?, pp. 481-510.
■ Kenneth Arrow (1969). “The Organization of Economic Activity: Issues
Pertinent to the Choice of Market versus Nonmarket Allocation”. In The Analysis
and Evaluation of Public Expenditures. Washington, DC: GPO, pp. 47-64.
■ Oliver Williamson (1979). “Transaction Cost Economics: The Governance of
Contractual Relations”. Journal of Law and Economics; V.22-#2, pp. 233-261.
■ Steven Cheung (1983). “The Contractual Nature of the Firm”. Journal of Law
and Economics; V.26-#1, pp. 1-21.
■ Oliver Williamson (1988). “The Logic of Economic Organization”. Journal of
Law, Economics and Organization; V.4-#1, pp. 65-93.
■ David Kreps (1996). “Markets and Hierarchies and (Mathematical) Economic
Theory”. Industrial and Corporate Change; V.5-#2, pp. 561-595.
■ Gibbons, Robert (2010). “Transaction-Cost Economics: Past, Present, and
Future?” Scandinavian Journal of Economics, 112(2), 263-88.
■ Howard Shelanski and Peter Klein (1995). “Empirical Research in Transaction
Cost Economics: A Review and Assessment”. Journal of Law, Economics, and
Organization; V.11-#2, pp. 335-361.
■ Scott Masten and Stéphane Saussier (2001). “Econometrics of Contracts: An
Assessment of Developments in the Empirical Literature of Contracting”. in E.
Brousseau and J.-M. Glachant, eds, Economics of Contracts: Theories and
Applications. Cambridge: Cambridge University Press, pp. 273-292.
■ Francine Lafontaine and Margaret Slade (2007). “Vertical Integration and Firm
Boundaries: The Evidence”. Journal of Economic Literature; V.45-#3, pp. 629-685.
■ Jeffrey T. Macher and Barak D. Richman (2008) “Transaction Cost Economics:
An Assessment of Empirical Research in the Social Sciences”. Business and
Politics: Vol. 10 : Iss.1, Article 1.
● The Firm as a Nexus of Contracts: The Agency Approach to the Firm
► Easterbrook and Fischel, Chapter 1.
► Armen Alchian and Harold Demsetz (1972). “Production, Information Costs,
and Economic Organization”. American Economic Review; V.62-#5, pp. 777-795.
► Michael Jensen and William Meckling (1976). “Theory of the Firm: Managerial
Behavior, Agency Costs and Capital Structure”. Journal of Financial Economics;
V.3-#4, pp. 305-360. [required: pp. 305-333]
► John Coffee, jr. (1990). “Unstable Coalitions: Corporate Governance as a
Multiplayer Game”. Georgetown Law Journal; V.78-#5, pp. 1495-1549.
■ Paul Milgrom and John Roberts (1988). “An Economic Approach to Influence
Activities in Organizations”. American Journal of Sociology; V.94-Supplement,
pp. s154-s179.
■ Bengt Holmström and Paul Milgrom (1991). “Multitask Principal-Agent
Analyses: Incentive Contracts, Asset Ownership and Job Design”. Journal of Law,
Economics and Organization; V.7-special issue, pp. 24-52.
■ Bengt Holmström and Paul Milgrom (1994). “The Firm as an Incentive
Mechanism”. American Economic Review; V.84-#4, pp. 972-991.
■ Jean-Jacques Laffont and David Martimort (1997). “The Firm as a
Multicontract Organization”. Journal of Economics and Management Strategy;
V.6-#2, pp 201-234.
● Incomplete Contracts, Property Rights, and the Firm
► Oliver Hart (1989). “An Economist’s Perspective on the Theory of the Firm”.
Columbia Law Review; V.89-#7, pp. 1757-1774.
► Oliver Hart (1995). “Corporate Governance: Some Theory and Implications”.
Economic Journal; V.105-#430, pp. 678-689.
► Andrei Shleifer and Robert Vishny (1997). “A Survey of Corporate
Governance”. Journal of Finance; V.52-#2, pp. 737-783. [Parts I and II, pp. 737-750]
■ Sanford Grossman and Oliver Hart (1986). “The Costs and Benefits of
Ownership: A Theory of Vertical and Lateral Organization”. Journal of Political
Economy; V.94-#4, pp. 691-719.
■ Oliver Hart and John Moore (1990). “Property Rights and the Nature of the
Firm”. Journal of Political Economy; V.98-#6, pp. 1119-1158.
■ Oliver Hart and John Moore (1999). “Foundations of Incomplete Contracts”.
Review of Economic Studies; V.66-#1, pp. 115-138.
■ Eric Maskin and Jean Tirole (1999). “Two Remarks on the Property Rights
Literature”. Review of Economic Studies; V.66-#1, pp. 139-149.
■ David DeMeza and Ben Lockwook (1998). “Does Asset Ownership Always
Motivate Managers? Outside Options and the Property Rights Theory of the
Firm”. Quarterly Journal of Economics; V.113-#2, pp. 361-386.
● Summarizing and Extending the Contracts Model
► Bengt Holmström and John Roberts (1998). “The Boundaries of the Firm
Revisited”. Journal of Economic Perspectives; V.12-#4, pp. 73-94.
► George Baker, Robert Gibbons and Kevin Murphy (2002). “Relational
Contracts and the Theory of the Firm”. Quarterly Journal of Economics; V.117-#1, pp. 39-83.
► Raghuram Rajan and Luigi Zingales (1998). “Power in a Theory of the Firm”.
Quarterly Journal of Economics; V.113-#2, pp. 387-432.
■ Jean Tirole (1988). “The Multicontract Organization”. Canadian Journal of
Economics; V.21-#3, pp. 459-466.
■ Jean Tirole (1992). “Collusion and the Theory of Organizations”. In J.-J.
Laffont, ed. Advances in Economic Theory. Cambridge: CUP, pp. 151-206.
■ Bengt Holmström (1999). “The Firm as a Subeconomy”. Journal of Law,
Economics & Organization; V.15-#1, pp. 74-102.
■ Maija Halonen (2002). “Reputation and the Allocation of Ownership”.
Economic Journal; V.112-#481, pp. 539-558.
■ Jean Tirole (2001). “Corporate Governance”. Econometrica; V.69-#1, pp. 1-35.
■ W. Bentley MacLeod (2007). “Reputations, Relationships and Contract
Enforcement”. Journal of Economic Literature; V.45-#3, pp. 595-628.
■ Hart, Oliver D. 2008. “Reference Points and the Theory of the Firm.”
Economica, 75(299), 404-11.
■ Hart, Oliver and John Moore. 2008. “Contracts as Reference Points.” Quarterly
Journal of Economics, 123(1), 1-48.
■ Hart, Oliver D. and Bengt Holmstrom. 2010. “A Theory of Firm Scope.”
Quarterly Journal of Economics, 125(2), 483-513.
● Transaction Costs in Action: GM-Fisher Body (Optional topic)
► Benjamin Klein, Robert Crawford and Armen Alchian (1978). “Vertical
Integration, Appropriable Rents and the Competitive Contracting Process”.
Journal of Law and Economics; V.21-#2, pp. 297-326.
► Ronald Coase (2000). “The Acquisition of Fisher Body by General Motors”.
Journal of Law & Economics; V.43-#1, pp. 15-31.
► Benjamin Klein (2000). “Fisher-General Motors and the Nature of the Firm”.
Journal of Law & Economics; V.43-#1, pp. 105-141.
► Patrick Bolton and David Scharfstein (1998). “Corporate Finance, The Theory
of the Firm and Organizations”. Journal of Economic Perspectives; V.12-#4, pp.
95-114. [comment & response]
► Michael Whinston (2003). “On the Transaction Cost Determinants of Vertical
Integration”. Journal of Law, Economics and Organization; V.19-#1, pp. 1-23.
● Why Capital Hires Labor (optional topic)
■ Gregory Dow and Louis Putterman (1999). “Why Capital (Usually) Hires
Labor: An Assessment of Proposed Explanations”. in M. Blair and M. Roe, eds.
Employees and Corporate Governance. Washington, DC: Brookings, pp. 17-57.
■ Mukesh Eswaran and Ashok Kotwal (1989). “Why Are Capitalists the
Bosses?”. Economic Journal; V.99-#394, pp. 162-176.
■ Gregory Dow (1993), “Why Capital Hires Labor: A Bargaining Perspective”.
American Economic Review; V.93-#1, pp. 118-134.
■ Simon, Herbert. 1951. “A Formal Theory of the Employment Relationship.”
Econometrica, 19(3), 293-305.
■ Stephen Marglin (1974). “What Do Bosses Do? The Origins and Functions of
Hierarchy in Capitalist Production”. Review of Radical Political Economics; V.6-#2, pp. 33-60. [Part II]
■ Michael Jensen and William Mecking (1979). “Rights and Production
Functions: An Application to Labor Managed Firms and Co-determination”.
Journal of Business; V.52-#4, pp. 469-506.
■ Oliver Williamson (1980). “The Organization of Work: A Comparative
Institutional Assessment”. Journal of Economic Behavior and Organization; 1-#1,
pp. 5-38. [Comment by Putterman and response]
■ Victor Goldberg (1980). “Bridges Over Contested Terrain: Exploring the
Radical Account of the Employment Relationship”. Journal of Economic
Behavior and Organization; 1-#3, pp. 249-277.
■ Samuel Bowles (1985). “The Production Process in a Competitive Economy:
Walrasian, Neo-Hobbesian, and Marxian Models”. American Economic Review;
V.75-#1, pp. 16-36.
■ David Landes (1986), “What Do Bosses Really Do?”. Journal of Economic
History; V.46-#3, pp. 585-623.
■ Henry Hansmann (1988). “Ownership of the Firm”. Journal of Law,
Economics, and Organization; V.4-#2, pp. 267-305.
■ Freeman, Richard B. and Edward P. Lazear. 1995. “An Economic Analysis of
Works Councils,” in J. Rogers and W. Streeck eds, Works Councils: Consultation,
Representation, and Cooperation in Industrial Relations. Chicago: University of
Chicago Press/NBER, 27-50.
■ George Mailath and Andrew Postlewaite (1990). “Workers vs. Firms:
Bargaining over a Firm’s Value”. Review of Economic Studies; V.57-#3, pp. 369-380.
■ Patrick Legros and Andrew Newman (1996), “Wealth Effects, Distribution, and
the Theory of Organization”. Journal of Economic Theory; V.70-#2, 312-341.
■ Faleye, Olubunmi; Vikas Mehrotra and Randall Morck. 2006. “When Labor
Has a Voice in Corporate Governance.” Journal of Financial and Quantitative
Analysis, 41(3), 489-510.
Topic III. Topics in Law and Economics of Corporate Governance
● Limited Liability and Capital Structure (optional topic)
► Easterbrook and Fischel, Chapter 2.
► Henry Manne (1967). “Our Two Corporate Systems: Law and Economics”.
Virginia Law Review; V.53-#2, pp. 259-284.
► Michael Jensen and William Meckling (1976). “Theory of the Firm: Managerial
Behavior, Agency Costs and Capital Structure”. Journal of Financial Economics;
V.3-#4, pp. 305-360. [pp. 333-360]
■ Merton Miller (1988). “The Modigliani-Miller Proposition After 30 Years”.
Journal of Economic Perspectives; V.2-#4, pp. 99-120. [Comments by: Stiglitz;
Ross; Bhattacharya; Modigliani]
■ Milton Harris and Arthur Raviv (1991). “The Theory of Capital Structure”.
Journal of Finance; V.46-#1, pp. 297-355.
■ Franco Modigliani and Merton Miller (1958). “The Cost of Capital, Corporate
Finance, and the Theory of Investment”. American Economic Review; V.48-#3,
pp. 261-297.
■ Joseph Stiglitz (1974). “On the Irrelevance of Corporate Financial Policy”.
American Economic Review; V.64-#6, pp. 851-866.
■ Eugene Fama (1978). “The Effects of a Firm’s Investment and Financing
Decisions on the Welfare of Its Security Holders”. American Economic Review;
V.68-#3, pp. 272-284.
■ Stewart Myers (1977). “Determinants of Corporate Borrowing”. Journal of
Financial Economics; V.5-#2, pp. 147-175.
■ Stephen Ross (1977). “The Determination of Financial Structure: The Incentive
Signaling Approach”. Bell Journal of Economics; V.8-#1, pp. 23-40.
■ Hayne Leland and David Pyle (1977). “Information Asymmetries, Financial
Structure, and Financial Intermediation”. Journal of Finance; V.32-#2, pp. 371-387. [Comment by Stephen Ross]
■ Stewart Myers and Nicholas Majluf (1984). “Corporate Financing and
Investment Decisions when Firms Have Information that Investors Do Not Have”.
Journal of Financial Economics; V.13-#2, pp. 187-221.
■ Oliver Williamson (1988). “Corporate Finance and Corporate Governance”.
Journal of Finance; V.43-#3, pp. 567-591.
■ Rajan, Raghuram G. and Luigi Zingales (1995). “What Do We Know About
Capital Structure? Some Evidence from International Data.” Journal of Finance,
50(5), 1421-60.
● The Berle-Means Firm: Separation of Ownership and Control
► Easterbrook and Fischel, Chapter 4
► Eugene Fama (1980). “Agency Problems and the Theory of the Firm”. Journal
of Political Economy; V.88-#2, pp. 288-307.
► Eugene Fama and Michael Jensen (1983). “Separation of Ownership and
Control”. Journal of Law and Economics; V.26-#2, pp. 301-325.
■ Eugene Fama and Michael Jensen (1983). “Agency Problems and Residual
Claims”. Journal of Law and Economics; V.26-#2, pp. 327-349.
► Oliver Williamson (1983). “Organization Form, Residual Claimants and
Corporate Control”. Journal of Law and Economics; V.26-#2, pp. 351-366.
► Benjamin Klein (1983). “Contracting Costs and Residual Claims: The
Separation of Ownership and Control”. Journal of Law and Economics; V.26-#2,
pp. 367-374.
■ Bengt Holmström (1982/1999). “Managerial Incentive Problems: A Dynamic
Perspective”. Review of Economic Studies; V.66-#1, pp. 169-182.
■ Adolph Berle and Gardiner Means (1932). The Modern Corporation and
Private Property. New York: Commerce Clearing House, inc.
■ Henry Manne (1962). “The ‘Higher Criticism’ of the Modern Corporation”.
Columbia Law Review; V.62-#3, pp. 399-432. [Comment by Berle]
■ Harold Demsetz (1983). “The Structure of Ownership and the Theory of the
Firm”. Journal of Law and Economics; V.26-#2, pp. 375-390.
■ Harold Demsetz and Kenneth Lehn (1985). “The Structure of Corporate
Ownership: Causes and Consequences”. Journal of Political Economy; V.93-#6,
pp. 1155-1177.
■ Ronald Gilson and Reinier Kraakman (1984). “The Mechanism of Market
Efficiency”. Virginia Law Review; V.70-#4, pp. 549-644.
● The non-Berle-Means Firm
► Masahiko Aoki (2000). “Information and Governance in the Silicon Valley
Model”. Vives, Chapter 5.
► Raghuram Rajan and Luigi Zingales (2000). “The Governance of the New
Enterprise”. Vives, Chapter 6.
■ Raghuram Rajan and Luigi Zingales (2001). “The Firm as a Dedicated
Hierarchy: A Theory of the Origins and Growth of Firms”. Quarterly Journal of
Economics; V.116-#3, pp. 805-852.
● Capital Structure and Control
■ Sanford Grossman and Oliver Hart (1982). “Corporate Financial Structure and
Managerial Incentives”. In J. McCall, ed. The Economics of Information and
Uncertainty. Chicago: University of Chicago Press/NBER, pp. 107-137.
■ René Stulz (1990). “Managerial Discretion and Optimal Financing Policies”.
Journal of Financial Economics, V.26-#1, pp. 3-27.
■ Philippe Aghion and Patrick Bolton (1992). “An ‘Incomplete Contracts’
Approach to Bankruptcy and the Optimal Financial Structure of the Firm”. Review
of Economic Studies; V.59-#3, pp. 473-494.
■ Enrico Perotti and Kathryn Spier (1993). “Capital Structure as a Bargaining
Tool”. American Economic Review; V83-#5, pp. 1131-1141.
■ Hart, Oliver. 1993. “Theories of Optimal Capital Structure: A Managerial
Discretion Perspective,” in M. M. Blair ed The Deal Decade: What Takeovers and
Leveraged Buyouts Mean for Corporate Governance. Washington, D.C.:
Brookings Institution, 19-43.
■ Hart, Oliver and John Moore. 1995. “Debt and Seniority: An Analysis of the
Role of Hard Claims in Constraining Management.” American Economic Review,
85(3), 567-85.
■ Dewatripont, Mathias and Jean Tirole. 1994. “A Theory of Debt and Equity:
Diversity of Securities and Manager-Shareholder Congruence.” Quarterly Journal
of Economics, 109(4), 1027-54.
■ Holmström, Bengt and Jean Tirole. 1997. “Financial Intermediation, Loanable
Funds and the Real Sector.” Quarterly Journal of Economics, 112(3), 663-91.
■ Zwiebel, Jeffrey. 1996. “Dynamic Capital Structure under Managerial
Entrenchment.” American Economic Review, 86(5), 1197-215.
■ Bolton, Patrick and Ernst-Ludwig von Thadden. 1998. “Liquidity and Control:
A Dynamic Theory of Corporate Ownership Structure.” Journal of Institutional
and Theoretical Economics, 154(1), 177-211.
■ McKnight, Phillip J. and Charlie Weir. 2009. “Agency Costs, Corporate
Governance Mechanisms and Ownership Structure in Large UK Publicly Quoted
Companies: A Panel Data Analysis.” Quarterly Review of Economics and
Finance, 49(2), 139-58.
■ Mutamimah and Sri Hartono. 2010. “Dividend, Debt, and Investment Policies
as Corporate Governance Mechanism.” Investment Management and Financial
Innovations, 7(2), 209-16.
● Corporate Control Transactions: Tenders, Takeovers, etc.
► Easterbrook and Fischel, Chapters 5-7
► Michael Jensen (1986). “Agency Costs of Free Cash Flow: Corporate Finance
and Takeovers”. American Economic Review; V.76-#2, pp. 323-329.
► Frederick Scherer (1988). “Corporate Takeovers: The Efficiency Arguments”.
Journal of Economic Perspectives; V.15-#2, pp. 69-82.
► Shleifer, Andrei and Robert Vishny (1990). “The Takeover Wave of the 1980s”.
Science; V.249-#4970 (August 17), pp 745-749.
► Bengt Holmström and Steven Kaplan (2001). “Corporate Governance and
Merger Activity in the US: Making Sense of the 1980s and 1990s”. Journal of
Economic Perspectives; V.15-#2, pp. 121-144.
■ Henry Manne (1965). “Mergers and the Market for Corporate Control”. Journal
of Political Economy; V.73-#2, pp. 110-120.
■ Sanford Grossman and Oliver Hart (1982). “Takeover Bids, the Free-rider
Problem, and the Theory of the Corporation”. Bell Journal of Economics; V.11-#1, pp. 42-64.
■ John Coffee (1984). “Regulating the Market for Corporate Control: A Critical
Assessment of the Tender Offer’s Role in Corporate Governance”. Columbia Law
Review; V.84-#5, pp. 1145-1296.
■ Gregg Jarrell, James Brickley and Jeffrey Netter (1988). “The Market for
Corporate Control: The Empirical Evidence Since 1980”. Journal of Economic
Perspectives. V.2-#1, pp. 49-68.
■ Michael Jensen (1988). “Takeovers: Their Causes and Consequences”. Journal
of Economic Perspectives; V.2-#1, pp. 21-48.
■ Shleifer Andrei and Lawrence Summers (1988). “Breach of Trust in Hostile
Takeovers”. in Alan Auerbach, ed. Corporate Takeovers: Causes and
Consequences. Chicago: University of Chicago Press.
■ Sanjai Bhagat, Andrei Shleifer and Robert Vishny (1990). “Hostile Takeovers
in the 1980s: The Return to Corporate Specialization”. Brookings Papers on
Economic Activity: Microeconomics. pp.1-72.
■ Julian Franks and Colin Mayer (1996). “Hostile Takeovers and Correction of
Managerial Failures”. Journal of Financial Economics; V.40-#1, pp. 163-181.
■ John Coates, IV (2000). “Takeover Defenses in the Shadow of the Pill: A
Critique of the Scientific Evidence”. Texas Law Review; V.79-#2, pp. 271-382.
■ Costas Siriopoulos, Antonios Georgopoulos and Athanasios Tsagkanos (2006).
“Does the ‘Market for Corporate Control’ Hypothesis Explain Takeover
Targets?”. Applied Economics Letters; V.13-#9, pp. 557-561.
● Compensation as Control
► Bebchuk, Lucian A. and Jesse M. Fried. 2003. “Executive Compensation as an
Agency Problem.” Journal of Economic Perspectives, 17(3), 71-92.
► Frydman, Carola and Dirk Jenter. 2010. “CEO Compensation.” Annual Review
of Financial Economics, 2(1), 75-102.
► Hermalin, Benjamin E. and Michael S. Weisbach. 1991. “The Effects of Board
Composition and Direct Incentives on Firm Performance.” Financial
Management, 20(4), 101-12.
■ Hermalin, Benjamin E. 2005. “Trends in Corporate Governance.” Journal of
Finance, 60(5), 2351-84.
■ Murphy, Kevin J. 1985. “Corporate Performance and Managerial
Remuneration: An Empirical Analysis.” Journal of Accounting and Economics,
7(1-3), 11-42.
■ John Core, Robert Holthausen and David Larcker (1999). “Corporate
Governance, Chief Executive Officer Compensation, and Firm Performance”.
Journal of Financial Economics; V.51-#3, pp. 371-406.
■ Bebchuk, Lucian A. and Jesse M. Fried. 2002. “Power, Rent Extraction, and
Executive Compensation.” CESifo Forum, 3(3), 23-28.
■ Cunat, Vicente and Maria Guadalupe. 2005. “How Does Product Market
Competition Shape Incentive Contracts?” Journal of the European Economic
Association, 3(5), 1058-82.
■ Sapp, Stephen G. 2008. “The Impact of Corporate Governance on Executive
Compensation.” European Financial Management, 14(4), 710-46.
■ Cunat, Vicente and Maria Guadalupe. 2009. “Executive Compensation and
Competition in the Banking and Financial Sectors.” Journal of Banking &
Finance, 33(3), 495-504.
■ Edwards, Jeremy S. S.; Wolfgang Eggert and Alfons J. Weichenrieder. 2009.
“Corporate Governance and Pay for Performance: Evidence from Germany.”
Economics of Governance, 10(1), 1-26.
■ Noe, Thomas H. 2009. “Tunnel-Proofing the Executive Suite: Transparency,
Temptation, and the Design of Executive Compensation.” Review of Financial
Studies, 22(12), 4849-80.
■ Drew-Becker, Ian. 2009. “How Much Sunlight Does It Take to Disinfect a
Boardroom? A Short History of Executive Compensation Regulation in America.”
CESifo Economic Studies, 55(3-4), 434-57.
■ Frydman, Carola. 2009. “Learning from the Past: Trends in Executive
Compensation over the 20th Century.” CESifo Economic Studies, 55(3-4), 458-81.
■ Frydman, Carola and Raven E. Saks. 2010. “Executive Compensation: A New
View from a Long-Term Perspective, 1936-2005.” Review of Financial Studies,
23(5), 2099-138.
■ O’Reilly, Charles A. and Brian G. M. Main. 2010. “Economic and
Psychological Perspectives on CEO Compensation: A Review and Synthesis.”
Industrial and Corporate Change, 19(3), 675-712.
■ Huang, Roco. 2010. “Because I’m Worth It? CEO Pay and Corporate
Governance.” Federal Reserve Bank of Philadelphia Business Review, 3rd
Quarter, 12-19.
■ Bebchuk, Lucian A. and Jesse M. Fried. 2004. Pay without Performance: The
Unfulfilled Promise of Executive Compensation. Cambridge: Harvard University
Press.
■ Weisbach, M. S. 2007. “Optimal Executive Compensation Versus Managerial
Power: A Review of Lucian Bebchuk and Jesse Fried’s Pay without Performance:
The Unfufilled Promise of Executive Compensation.” Journal of Economic
Literature, 45(2), 419-28.
● Boards of Directors: Managers, Stockholders, and Bondholders
► Easterbrook and Fischel, Chapter 3.
► Benjamin Hermalin and Michael Weisbach (2003). “Boards of Directors as an
Endogenously Determined Institution: A Survey of the Economic Literature”.
FRBNY Policy Review; April, pp. 7-26.
► Clifford Holderness (2003). “A Survey of Blockholders and Corporate Control”.
FRBNY Policy Review; April, pp. 51-64.
► Adams, Renee B.; Benjamin E. Hermalin and Michael S. Weisbach. 2010. “The
Role of Boards of Directors in Corporate Governance: A Conceptual Framework
and Survey.” Journal of Economic Literature, 48(1), 58-107.
■ Michael Jensen and Jerold Warner (1987). “The Distribution of Power among
Corporate Managers, Shareholders and Directors”. Journal of Financial
Economics; V.20-#1/2, pp. 3-24.
■ Andrei Shleifer and Robert Vishny (1986). “Large Shareholders and Corporate
Control”. Journal of Political Economy; V.94-#3, pp. 461-488.
■ James Brickley and Christopher James (1987). “The Takeover Market,
Corporate Board Composition, and Ownership Structure”. Journal of Law and
Economics; V.30-#1, pp. 161-180.
■ Manne, Henry G. 1964. “Some Theoretical Aspects of Share Voting.”
Columbia Law Review, 64(8), 1427-45.
■ Sanford Grossman and Oliver Hart (1987). “One Share-One Vote and the
Market for Corporate Control”. Journal of Financial Economics; V.20-#1/2, pp.
175-202.
■ Milton Harris and Artur Raviv (1987). “Corporate Governance: Voting Rights
and Majority Rules”. Journal of Financial Economics; V.20-#1/2, pp. 203-235.
■ Yermack, David (2010). “Shareholder Voting and Corporate Governance.”
Annual Review of Financial Economics, V.2-#1, 103-25.
■ Benjamin Hermalin and Michael Weisbach (1998). “Endogenously Chosen
Boards of Directors and their Monitoring of the CEO”. American Economic
Review; V.88-#1, pp. 96-118.
■ Randall Morck, Andrei Shleifer and Robert W. Vishny (1987). “Management
Ownership and Market Valuation : An Empirical Analysis”. Journal of Financial
Economics; V.20-#1/2, pp. 293-315.
■ Randall S. Kroszner and Philip E. Strahan (2001). “Bankers on Boards:
Monitoring, Conflicts of Interest, and Lender Liability”. Journal of Financial
Economics; V.62-#3, pp. 415-452.
■ Stuart Gillian and Laura Starks (2007). “The Evolution of Shareholder Activism
in the U.S.”. Journal of Applied Corporate Finance; V.19-#1, pp. 55-73.
● Gatekeepers and Corporate Governance
■ Coffee, John C. 2002. “Understanding Enron: “It’s About the Gatekeepers,
Stupid”.” Business Lawyer, 57(4), 1403-20.
■ Coffee, John C. (2006). Gatekeepers: The Professions and Corporate
Governance. New York: Oxford University Press.
■ Ronen, J. 2010. “Corporate Audits and How to Fix Them.” Journal of
Economic Perspectives, 24(2), 189-210.
● Germany: Banks, Co-Determination, and All That
■ Pistor, Katharina. 1999. “Codetermination: A Sociopolitical Model with
Governance Externalities,” in M. M. Blair and M. J. Roe eds, Employees and
Corporate Governance. Washington, DC: Brookings Institution Press, 163-93.
■ Roe, Mark J. 1999. “German Codetermination and German Securities
Markets,” in M. M. Blair and M. J. Roe eds, Employees and Corporate
Governance. Washington, DC: Brookings Institution Press, 194-205.
■ Baums, Theodor and Bernd Frick. 1999. “The Market Value of the
Codetermined Firm,” in M. M. Blair and M. J. Roe eds, Employees and Corporate
Governance. Washington, D.C.: Brookings Institution Press, 206-35.
■ Baums, Theodor and Kenneth E. Scott. 2005. “Taking Shareholder Protection
Seriously? Corporate Governance in the United States and Germany.” American
Journal of Comparative Law, 53(1), 31-75.
■ Addison, John T.; Claus Schnabel and Joachim Wagner. 2004. “The Course of
Research into the Economic Consequences of German Works Councils.” British
Journal of Industrial Relations, 42(2), 255-81.
■ Addison, John T.; Paulino Teixeira and Thomas Zwick. 2010. “German Works
Councils and the Anatomy of Wages.” Industrial and Labor Relations Review,
63(2), 247-70.
■ FitzRoy, Felix R. and Kornelius Kraft. 2005. “Co-Determination, Efficiency
and Productivity.” British Journal of Industrial Relations, 43(2), 233-47.
■ Cheffins, Brian R. 2001. “The Metamorphosis of “Germany Inc.”: The Case of
Executive Pay.” American Journal of Comparative Law, 49(3), 497-539.
■ Edwards, Jeremy S. S.; Wolfgang Eggert and Alfons J. Weichenrieder. 2009.
“Corporate Governance and Pay for Performance: Evidence from Germany.”
Economics of Governance, 10(1), 1-26.
■ Franks, Julian and Colin Mayer. 1998. “Bank Control, Takeovers and Corporate
Governance in Germany.” Journal of Banking and Finance, 22(10-11), 1385-403.
■ Franks, Julian and Colin Mayer. 2001. “Ownership and Control of German
Corporations.” Review of Financial Studies, 14(4), 943-77.
■ Franks, Julian; Colin Mayer and Hannes F. Wagner. 2006. “The Origins of the
German Corporation: Finance, Ownership and Control.” Review of Finance,
10(4), 537-85.
■ Gorton, Gary and Frank A. Schmid. 2000. “Universal Banking and the
Performance of German Firms.” Journal of Financial Economics, 58(1-2), 29-80.
■ Gorton, Gary and Frank A. Schmid. 2004. “Capital, Labor, and the Firm: A
Study of German Codetermination.” Journal of the European Economic
Association, 2(5), 863-905.
■ Edwards, Jeremy S. S. and Marcus Nibler. 2000. “Corporate Governance in
Germany: The Role of Banks and Ownership Concentration.” Economic Policy: A
European Forum #31, 237-60.
■ Edwards, Jeremy S. S. and Alfons J. Weichenrieder. 2009. “Control Rights,
Pyramids, and the Measurement of Ownership Concentration.” Journal of
Economic Behavior and Organization, 72(1), 489-508.
■ Petry, Stefan. 2009. “Workers on the Board and Shareholder Wealth: Evidence
from a Natural Experiment.” Judge Business School, University of Cambridge,
■ Wagner, Joachim. 2009. “One-Third Codetermination at Company Supervisory
Boards and Firm Performance in German Manufacturing Industries: First Direct
Evidence from Aa New Type of Enterprise Data.” IZA Discussion Paper, #4352.
■ Bermig, Andreas and Bernd Frick. 2010. “Board Size, Board Composition and
Firm Performance.” University of Paderborn – Faculty of Business
Administration, Economics and Business Computing,
■ Goergen, Marc; M. C. Manjon and Luc Renneboog. 2008. “Recent
Developments in German Corporate Governance.” International Review of Law
and Economics, 28(3), 175-93.
■ Edwards, Jeremy S. S. and Klaus Fischer. 1994. Banks, Finance and
Investments in Germany. Cambridge: Cambridge University Press/CEPR.
■ O’Sullivan, Mary. 2000. Contests for Corporate Control: Corporate
Governance and Economic Performance in the United States and Germany. New
York: Oxford University Press.
■ Streeck, Wolfgang. 2009. Re-Forming Capitalism: Institutional Change in the
German Political Economy. Oxford: Oxford University Press.
Topic IV. Comparative Law and Corporate Governance
● Overview of the Theoretical Issues (Readings not required)
■ Andrei Shleifer and Robert Vishny (1997). “A Survey of Corporate
Governance”. Journal of Finance; V.52-#2, pp. 737-783. [Parts II-VIII, pp. 750-775]
■ Neil Fligstein and Robert Freeland (1995). “Theoretical and Comparative
Perspectives on Corporate Governance”. Annual Review of Sociology; V.21, pp.
21-43.
■ Ross Levine (2005). “Law, Endowments and Property Rights”. Journal of
Economic Perspectives; V.19-#3, pp. 61-88.
■ Thorsten Beck and Ross Levine (2005). “Legal Institutions and Financial
Development”. In Claude Menard and Mary Shirley, eds. Handbook of New
Institutional Economics. Dordrecht: Springer, pp. 251-278.
● Overview of Comparative Corporate Governance (Optional topic)
■ Julian Franks and Colin Mayer (1990). “Capital Markets and Corporate
Control: A Study of France, Germany and the UK”. Economic Policy; V.5-#1, pp.
191-231.
■ Mark Roe (1993). “Some Differences in Company Structure in Germany, Japan
and the United States”. Yale Law Journal; V.102-#7, pp. 1927-2003. [Comments
by Ramseyer and Romano follow]
■ Ronald Gilson and Mark Roe (1993). “Understanding the Japanese Keiretsu:
Overlaps between Company Governance and Industrial Organization”. Yale Law
Journal; V.102-#4, 871-906.
■ Bernard Black and John Coffee (1994). “Hail Britannia?: Institutional Investor
Behavior under Limited Regulation”. Michigan Law Review; V.92-#7, pp. 1997-2087.
■ Jonathan Charkham (1994). Keeping Good Company: A Study of Corporate
Governance in Five Countries. Oxford: Clarendon Press.
■ Stephen Prowse (1995). “Corporate Governance in International Perspective: A
Survey of Corporate Governance Mechanisms among Large Firms in the U.S.,
U.K., Japan and Germany”. Financial Markets, Institutions and Instruments; V.4-#1, pp. 1-63.
■ Stephen Prowse (1996). “Corporate Finance in International Perspective: Legal
and Regulatory Influences on Financial System Development”. Federal Reserve
Bank of Dallas Economic Review; Third Quarter, 1996, pp. 2-15.
■ Henry Hansmann (1996). The Ownership of Enterprise. Cambridge: Harvard.
■ Julian Franks and Colin Mayer (1997). “Corporate Ownership and Control in
the U.K., Germany, and France”. Journal of Applied Corporate Finance; V.9-#4,
pp. 30-45.
■ Steven Kaplan (1997). “Corporate Governance and Corporate Performance: A
Comparison of Germany, Japan and the U.S.”. Journal of Applied Corporate
Finance; V.9-#4, pp. 86-93.
■ Colin Mayer (1998). “Financial Systems and Corporate Governance: A Review
of the Evidence”. Journal of Institutional and Theoretical Economics; V.154-#?,
pp. 144-165.
■ Rafael LaPorta, Florencio Lopez-de-Silanes, and Andrei Shleifer (1999).
“Corporate Ownership Around the World”. Journal of Finance; V.54-#2, pp. 471-517.
■ Stijn Claessens, Simeon Djankov and Larry Lang (2000). “The Separation of
Ownership and Control in East Asian Corporations”. Journal of Financial
Economics; V.58-#1/2, pp. 81-112.
■ Stijn Claessens and Joseph Fan (2002). “Corporate Governance in Asia: A
Survey”. International Review of Finance; V.3-#2, pp. 105-129.
■ Stijn Claessens, Simeon Djankov and Tatiana Nenova (2001). “Corporate Risk
Around the World”. In Reuven Glick, Ramon Moreno and Mark Spiegel (eds).
Financial Crises in Emerging Markets. Cambridge: Cambridge University Press,
pp. 305-338.
■ Jeremy Edwards; Marcus Nibler; Erik Berglöf and Julian Franks (2000).
“Corporate Governance in Germany: The Role of Banks and Ownership
Concentration”. Economic Policy; V.15-#31, pp. 237-267.
■ Julian Franks and Colin Mayer (2001). “Ownership and Control of Germany
Corporations”. Review of Financial Studies; V.14-#4, pp. 943-977.
■ Franks, Julian and Colin Mayer (2002). “Corporate Governance in the UK–Contrasted with the US System.” CESifo Forum, 3(3), 13-22.
■ Jürgen Beyer and Martin Höpner (2003). “The Disintegration of Organized
Capitalism: German Corporate Governance in the 1990s”. West European
Politics; V.26-#4, pp. 179-198.
■ Fabrizio Barca and Marco Becht (2001). The Control of Corporate Europe.
New York: Oxford University Press.
■ Mara Faccio and Larry Lang (2002). “The Ultimate Ownership of Corporate
Europe”. Journal of Financial Economics; V.65-#3, pp. 365-395.
■ Péter Harbula (2007). “The Ownership Structure, Governance and Performance
of French Companies”. Journal of Applied Corporate Finance; V.19-#1, pp. 88-101
■ Doidge, Craig; G. Andrew Karolyi and René M. Stulz (2007). “Why Do
Countries Matter So Much for Corporate Governance?” Journal of Financial
Economics, 86(1), 1-39.
■Nicholas Bloom and John van Reenen (2007). “Measuring and Explaining
Management Practices across Firms and Countries.” Quarterly Journal of
Economics, 122(4), 1351-408.
■ Nicholas Bloom and John Van Reenen (2010). “Why Do Management Practices
Differ across Firms and Countries?” Journal of Economic Perspectives, 24(1),
203-24.
■ Jonathan Charkham (2005). Keeping Better Company: Corporate Governance
Ten Years On. New York: Oxford University Press.
■ Randall Morck, ed. (2005). A Global History of Corporate Governance.
Chicago: University of Chicago Press/NBER.
● Markets v. Law: Legal Foundations of Corporate Governance?
► Franklin Allen and Douglas Gale (2000). “Corporate Governance and
Competition”. Chapter 2 in Vives.
■ Frank Easterbrook (1997). “International Corporate Differences: Markets or
Law?”. Journal of Applied Corporate Finance; V.9-#4, pp. 23-30.
■ Edward Glaeser, Simon Johnson and Andrei Shleifer (2001). “Coase vs. the
Coasians”. Quarterly Journal of Economics; V.116-#3, pp. 301-325.
■ Bernard Black (2001). “The Legal and Institutional Preconditions for Strong
Securities Markets”. UCLA Law Review; V.48-#4, pp. 781-855.
■ John Coffee (2001). “The Rise of Dispersed Ownership: The Role of Law in the
Separation of Ownership and Control”. Yale Law Journal; V.111-#1, pp. 1-82.
■ Brian Cheffins (2001). “Does Law Matter? The Separation of Ownership and
Control in the United Kingdom”. Journal of Legal Studies; V.30-#2, pp. 459-484.
■ Brian Cheffins (2003). “Mergers and Corporate Ownership Structure: The
United States and Germany at the Turn of the 20th Century”. American Journal of
Comparative Law; V.51-#3, pp. 473-503.
■ Naomi Lamoreaux and Jean-Laurent Rosenthal (2005). “Legal Regime and
Contractual Flexibility: A Comparison of Business’s Organizational Choices in
France and the United States during the Era of Industrialization”. American Law
and Economics Review; V.7-#1, pp. 28-61.
■ Lamoreaux, Naomi R. (2009). “Scylla or Charybdis? Historical Reflections on
Two Basic Problems of Corporate Governance.” Business History Review, 83(1),
9-34.
■ Julian Franks, Colin Mayer, and Hannes F. Wagner (2006). “The Origins of the
German Corporation – Finance, Ownership and Control”. Review of Finance;
V.10-#4, pp. 537-585.
■ Franks, Julian, Colin Mayer and Stefano Rossi (2009). “Ownership: Evolution
and Regulation.” Review of Financial Studies, 22(10), 4009-56.
■ Avinash Dixit (2004). Lawlessness and Economics: Alternative Modes of
Governance. Princeton: Princeton University Press.
■ Daron Acemoglu and Simon Johnson (2005). “Unbundling Institutions”.
Journal of Political Economy; V.113-#5, pp. 949-995.
● Quality of Law: History, Culture, and Corporate Governance
► Rafael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny
(2000). “Investor Protection and Corporate Governance”. Journal of Financial
Economics; V.58-#1/2, pp. 3-27.
► Mark Roe (2003). Political Determinants of Corporate Governance. Oxford:
OUP. [Section VI, pp. 159-196 for this topic.]
■ Rafael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert
Vishny (1997). “The Legal Determinants of External Finance”. Journal of
Finance; V.52-#3, pp. 1131-1150.
■ Rafael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert
Vishny (1998). “Law and Finance”. Journal of Political Economy; V.106-#6, pp.
1113-1155.
■ Simon Johnson, Rafael LaPorta, Florencio Lopez-de-Silanes, and Andrei
Shleifer (2000). “Tunneling”. American Economic Review; V.90-#2, pp. 22-27.
■ Edward Glaeser and Andrei Shleifer (2002). “Legal Origins”. Quarterly Journal
of Economics; V.117-#4, pp. 1193-1230.
■ Simon Johnson, John McMillan and Christopher Woodruff (2002). “Property
Rights and Finance”. American Economic Review; V.92-#5, pp. 1335-1356.
■ Rafael LaPorta, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert
Vishny (2002). “Investor Protection and Corporate Valuation”. Journal of
Finance; V.57-#3, pp. 1147-1170.
■ Rafael LaPorta, Florencio Lopez-de-Silanes, and Andrei Shleifer (2006). “What
Works in Securities Law?”. Journal of Finance; V.61-#1, pp. 1-32.
■ John Coffee (2001). “Do Norms Matter?: A Cross Country Evaluation”.
University of Pennsylvania Law Review; V.149-#6, pp. 2151-2177.
■ Amir Licht (2001). “The Mother of All Path Dependencies: Toward a
Cross-Cultural Theory of Corporate Governance Systems”. Delaware Corporate
Law Journal; V.26-#1, pp. 147-205.
■ Mark Roe (2002). “Can Culture Constrain the Economic Model of Corporate
Law?”. University of Chicago Law Review; V.69-#3, pp. 1255-1269.
■ René Stulz and Rohan Williamson (2003). “Culture, Openness and Finance”.
Journal of Financial Economics; V.70-#3, pp. 313-349.
■ Steven Casper (2001). “The Legal Framework for Corporate Governance: The
Influence of Contract Law on Company Strategies in Germany and the United
States”. In Hall and Soskice, eds. Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage. Oxford: OUP, pp. 387-416.
■ Gunther Teubner (2001). “Legal Irritants: How Unifying Law Ends up in New
Divergences”. In Hall and Soskice, eds. Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage. Oxford: OUP, pp. 417-441.
■ Katharina Pistor, Yoram Keinan, Jan Kleinheisterkamp, and Mark West (2002).
“The Evolution of Corporate Law: A Cross-Country Comparison”. University of
Pennsylvania Journal of International Economic Law; V.23-#, pp. 791-871.
■ Katharina Pistor, Yoram Keinan, Jan Kleinheisterkamp, and Mark West (2003).
“Evolution of Corporate Law and the Transplant Effect”. The World Bank
Research Observer; V.18-#1, pp. 89-112.
■ Katharina Pistor, Yoram Keinan, Jan Kleinheisterkamp, and Mark West (2003).
“Innovation in Corporate Law”. Journal of Comparative Economics; V.31-#4, pp.
653-675.
■ Klaus Gugler, Dennis Mueller, and B. Burcin Yurtoglu (2003). “The Impact of
Corporate Governance on Investment Returns in Developed and Developing
Countries”. Economic Journal; V.113-#491, pp. F511-F539.
■ Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine (2003). “Law and
Finance: Why Does Legal Origin Matter?”. Journal of Comparative Economics;
V.31-#4, pp. 653-675.
■ Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine (2003). “Law,
Endowments and Finance”. Journal of Financial Economics; V.70-#2, pp. 137-181.
■ Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine (2005). “Law and Firm’s
Access to Finance”. American Law and Economics Review; V.7-#1, pp. 211-252.
■ Art Durney and E. Han Kim (2007). “Explaining Differences in the Quality of
Governance Among Countries: Evidence from Emerging Markets”. Journal of
Applied Corporate Finance; V.19-#1, pp. 16-24.
■ John Coffee (2007). “Law and the Market: The Impact of Enforcement”.
Columbia Law and Economics Working Paper No. 304.
● Consequences of Legal and Financial Structure (Optional topic)
► Wendy Carlin and Colin Mayer (2000). “How Do Financial Systems Affect
Economic Performance?”. Vives, Chapter 4.
► Raghuram Rajan and Luigi Zingales (2001). “Financial Systems, Industrial
Structure and Growth”. Oxford Review of Economic Policy; V.17-#4, pp.
► Thorsten Beck, Asli Demirgüç-Kunt, and Ross Levine (2001). “Legal Theories
of Financial Development”. Oxford Review of Economic Policy; V.17-#4, pp.
483-501.
► Randall Morck, Daniel Wolfenzon and Bernard Yeung (2005). “Corporate
Governance, Economic Entrenchment and Growth”. Journal of Economic
Literature; V.43-#3, pp. 655-720.
► La Porta, Rafael; Florencio Lopez-de-Silanes and Andrei Shleifer (2008). “The
Economic Consequences of Legal Origins.” Journal of Economic Literature,
46(2), 285-332.
■ Ross Levine (1997). “Financial Development and Economic Growth: Views
and Agenda”. Journal of Economic Literature; V.35-#2, pp. 688-726.
■ Robert King and Ross Levine (1993). “Finance and Growth: Schumpeter Might
Be Right”. Quarterly Journal of Economics; V.108-#3, pp. 681-737.
■ Ross Levine and Sara Zervos (1998). “Stock Markets, Banks and Economic
Growth”. American Economic Review; V.88-#3, pp. 537-558.
■ Raghuram Rajan and Luigi Zingales (1998). “Financial Dependence and
Growth”. American Economic Review; V.88-#3, pp. 559-586.
■ Asli Demirgüç-Kunt and Vojislav Maksimovic (1998). “Law, Finance and Firm
Growth”. Journal of Finance; V.53-#6, pp. 2107-2137.
■ Thorsten Beck, Ross Levine, and Norman Loayaza (2000). “Finance and the
Sources of Growth”. Journal of Financial Economics; V.58-#1/2 , pp. 261-300.
■ Thorsten Beck and Ross Levine (2002). “Industry Growth and Capital
Allocation: Does Having a Market- or Bank-Based System Matter?”. Journal of
Financial Economics; V.64-#2, pp. 147-180.
■ Kenneth Sokoloff and Stanley Engerman (2000). “History Lessons: Institutions,
Factor Endowments, and Paths of Development in the New World”. Journal of
Economic Perspectives; V.14-#3, pp. 217-232.
■ Randall S. Kroszner, Luc Laeven and Daniela Klingebiel (2007). “Banking
Crises, Financial Dependence and Growth”. Journal of Financial Economics;
V.84-#1, pp. 187-228.
■ Dam, Kenneth W. 2006. The Law-Growth Nexus: The Rule of Law and
Economic Development. Washington, D.C.: Brookings Institution Press.
■ Roe, Mark J. and Jordan I. Siegel (2009). “Finance and Politics: A Review
Essay Based on Kenneth Dam’s Analysis of Legal Traditions in the Law-Growth
Nexus.” Journal of Economic Literature, 47(3), 781-800.
Topic V. The Political Economy of Corporate Governance
● Comparative Political Economy of Corporate Governance: Intro
► Mark Roe (2003). Political Determinants of Corporate Governance. Oxford:
OUP. [Pages 1-107 for this topic.]
► Gourevitch & Shinn, Chapter 2-4
► Raghuram Rajan and Luigi Zingales (2003). “The Great Reversals: The Politics
of Financial Development in the Twentieth Century”. Journal of Financial
Economics; V.69-#1, pp. 5-50. [Pages 1-17 for this topic.]
■ Paul Milgrom and John Roberts (1995). “Complementarities and Fit: Strategy,
Structure, and Organizational Change in Manufacturing”. Journal of Accounting
and Economics; V.19-#2/3, pp. 179-208.
■ Paul Milgrom and John Roberts (1994). “Complementarities and Systems:
Understanding Japanese Economic Organization”. Estudios Economicos; V.9-#1,
pp. 3-42.
■ Martin Höpner (2005). “What Connects Industrial Relations and Corporate
Governance? Explaining Institutional Complementarity”. Socio Economic
Review; V.3-#2, pp. 331-357. [Followed by comments and response, 359-387.]
■ Peter Hall and David Soskice (2006). “Varieties of Capitalism and Institutional
Complementarities”. In Robert Franzese, Peter Mooslechner and Martin
Schürzpp, eds. Institutional Conflicts and Complementarities. Berlin: Springer,
pp. 43-76.
■ Peter Hall and Daniel Gingerich (2004). “Varieties of Capitalism and
Institutional Complementarities in the Macroeconomy: An Empirical Analysis”.
Max-Planck-Institut für Gesellschaftsforschung, Discussion Paper, # 04-05.
● Comparative PE of Corporate Governance: Class Struggle
► Gourevitch & Shinn, Chapter 5
► Mark Roe (2003). Political Determinants of Corporate Governance. Oxford:
OUP. [Pages 109-158 & 197-204 for this topic.]
■ Samuel Bowles and Herbert Gintis (1988). “Contested Exchange: Political
Economy and Modern Economic Theory”. American Economic Review; V.78-#2,
pp. 145-150.
■ Herbert Gintis (1989). “Financial Markets and the Political Structure of the
Enterprise”. Journal of Economic Behavior and Organization; V. 11-#3, pp.
311-322.
■ Brian Cheffins (2002). “Putting Britain on the Roe Map: The Emergence of the
Berle-Means Corporation in the United Kingdom”. In Joseph McCahery, Piet
Moerland, Theo Raaijmakers, and Luc Renneboorg eds. Corporate Governance
Regimes: Convergence and Diversity. Oxford: Oxford University Press, pp. 147-172.
■ Roe, Mark J. 2006. “Legal Origins, Politics, and Modern Stock Markets.”
Harvard Law Review, 120(2), 460-527.
● Comparative PE of Corporate Governance: Inter-Sectoral Struggle
► Gourevitch & Shinn, Chapters 6 & 7
■ Marco Pagano and Paolo Volpin (2005). “The Political Economy of Corporate
Governance”. American Economic Review; V.95-#4, pp. 1005-1030.
■ Peter Hall and David Soskice (2001). “An Introduction to Varieties of
Capitalism”. In Hall and Soskice, eds. Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage. Oxford: OUP, pp. 1-68.
■ Sigurt Vitols (2001). “The Origin of Bank-Based and Market-Based Financial
Systems: Germany, Japan and the United States”. In W. Streeck and K.
Yamamura, eds. The Origins of Nonliberal Capitalism: Germany and Japan in
Comparison. Ithaca: Cornell University Press, pp. 171-199.
■ Sigurt Vitols (2001). “Varieties of Corporate Governance: Comparing Germany
and the UK”. In Hall and Soskice, eds. Varieties of Capitalism: The Institutional
Foundations of Comparative Advantage. Oxford: OUP, pp. 337-360.
■ Sigurt Vitols (2003). “From Banks to Markets: The Political Economy of
Liberalization of the German and Japanese Financial Systems”. In K. Yamamura
and W. Streeck, eds. The End of Diversity? Prospects for German and Japanese
Capitalism. Ithaca: Cornell University Press, pp. 240-260.
■ Gregory Jackson (2001). “The Origins of Nonliberal Corporate Governance in
Germany and Japan”. In W. Streeck and K. Yamamura, eds. The Origins of
Nonliberal Capitalism: Germany and Japan in Comparison. Ithaca: Cornell
University Press, pp. 121-170.
■ Gregory Jackson (2003). “Corporate Governance in Germany and Japan:
Liberalization Pressures and Responses during the 1990s”. In K. Yamamura and
W. Streeck, eds. The End of Diversity? Prospects for German and Japanese
Capitalism. Ithaca: Cornell University Press, pp. 261-305.
■ Bruno Amable, Ekkehard Ernst, and Stefano Palombarini (2005). “How Do
Financial Markets Affect Industrial Relations: An Institutional Complementarity
Approach”. Socio Economic Review; V.3-#2, pp. 311-330.
■ Michael Goyer (2006). “Varieties of Institutional Investors and National
Models of Capitalism: The Transformation of Corporate Governance in France
and Germany”. Politics and Society; V.34-#3, pp. 399-430.
● Comparative PE of Corporate Governance: Insiders v. Outsiders
► Raghuram Rajan and Luigi Zingales (2003). “The Great Reversals: The Politics
of Financial Development in the Twentieth Century”. Journal of Financial
Economics; V.69-#1, pp. 5-50. [Pages 17-50.]
► Martin Hellwig (2006). “On the Economics and Politics of Corporate Finance
and Corporate Control”. Chapter 3 in Vives.
► Marco Pagano and Paolo Volpin (2001). “The Political Economy of Finance”.
Oxford Review of Economic Policy; V.17-#4, pp. 502-519.
■ Marco Pagano and Paolo Volpin (2005). “Workers, Managers, and Corporate
Control”. Journal of Finance; V.60-#2, pp. 841-868.
■ Rainer Fehn and Carsten-Patrick Meier (2001). “The Positive Economics of
Labor Market Rigidities and Investor Protection”. KYKLOS; V.54-#4, pp. 557-590.
■ Enrico Perotti and Ernst-Ludwig von Thadden (2004). “Dominant Investors and
Strategic Transparency”. Journal of Law, Economics and Organization; V.21-#?,
pp. 76-102.
■ Enrico Perotti and Ernst-Ludwig von Thadden (2006). “The Political Economy
of Corporate Control and Labor Rents”. Journal of Political Economy; V.114-#1,
pp. 145-174.
■ Enrico Perotti and Ernst-Ludwig von Thadden (2006). “Corporate Governance
and the Distribution of Labor Rents”. Journal of Institutional and Theoretical
Economics; V.162-#1, pp. 204-217.
■ Raghuram Rajan and Luigi Zingales (2003). Saving Capitalism from the
Capitalists: Unleashing the Power of Financial Markets to Create Wealth and
Spread Opportunity. New York: Crown Books.
Topic VI. Dynamics of Corporate Governance: Convergence or
Persistence?
● Delaware: Convergence v. Persistence in US Corporate Governance
► Easterbrook and Fischel, Chapter 8.
► Roberta Romano (2005). “Is Regulatory Competition a Problem or Irrelevant for
Corporate Governance?”. Oxford Review of Economic Policy; V.21-#2, pp.
212-231.
► Mark Roe (2005). “Regulatory Competition in Making Corporate Law in the
US–and Its Limits”. Oxford Review of Economic Policy; V.21-#2, pp. 232-242.
■ Romano, Roberta (1985). “Law as a Product: Some Pieces of the Incorporation
Puzzle.” Journal of Law, Economics, and Organization, 1(2), 225-83.
■ Roberta Romano (1987). “The State Competition Debate in Corporate Law”.
Cardozo Law Review; V.8-#4, pp. 709-757.
■ Romano, Roberta. 1993. The Genius of American Corporate Law. Washington,
D.C.: AEI Press.
■ Macey, Jonathan R. and Geoffrey P. Miller (1987). “Toward an Interest-Group
Theory of Delaware Corporate Law.” Texas Law Review, 65(3), 469-523.
■ Bernard Black (1990). “Is Corporate Law Trivial? A Political and Economic
Analysis”. Northwestern University Law Review; V.84-#2, pp. 542-597.
■ Kamar, Ehud (1998). “A Regulatory Competition Theory of Indeterminacy in
Corporate Law.” Columbia Law Review, 98(8), 1908-59.
■ Kahan, Marcel and Ehud Kamar (2002). “The Myth of State Competition in
Corporate Law.” Stanford Law Review, V.55-#3, 679-749.
■ Mark Roe (2003). “Delaware’s Competition”. Harvard Law Review; V.117-#2,
pp. 588-646.
■ Mark Roe (2005). “Delaware’s Politics”. Harvard Law Review; V.118-#8, pp.
2491-2543.
■ Oren Bar-Gill, Michal Barzuza, and Lucian Bebchuk (2006). “The Market for
Corporate Law”. Journal of Institutional and Theoretical Economics; V.162-#1,
pp. 134-160.
● Globalization and Convergence: Theory
► Gourevitch & Shinn, Chapter 8.
► Lucian Bebchuk and Mark Roe (1999). “A Theory of Path Dependence in
Corporate Ownership and Governance”. Stanford Law Review; V.52-#1, pp. 127-150.
► John Coffee (1999). “The Future as History: The Prospects for Global
Convergence in Corporate Governance and Its Implications”. Northwestern
University Law Review; V.93-#3, pp. 641-707.
► Henry Hansmann and Reinier Kraakman (2001). “The End of History for
Corporate Law”. Georgetown Law Journal; V.89-#?, pp. 439-468.
► Ronald Gilson (2001). “Globalization of Corporate Governance: Convergence
of Form or Function”. American Journal of Comparative Law; V.49-#2, pp. 329-357.
■ Michael Jensen (1994). “The Modern Industrial Revolution, Exit, and the
Failure of Internal Control Systems”. Journal of Finance; V.48-#3, pp. 831-880.
■ Curtis Milhaupt (1998). “Property Rights in Firms”. Virginia Law Review;
V.84-#6, pp. 1145-1194.
■ Bruno Amable (2000). “Institutional Complementarity and the Diversity of
Social Systems of Innovation and Production”. Review of International Political
Economy; V.7-#4, pp. 645-687.
■ Reinhard Schmidt and Gerald Spindler (2002). “Path Dependence, Corporate
Governance and Complementarity”. International Finance; V.5-#3, pp. 311-333.
■ John Coffee (2002). “Racing towards the Top?: The Impact of Cross-Listings
and Stock Market Competition on International Corporate Governance”.
Columbia Law Review; V.102-#7, pp. 1757-1831.
■ Enrico Perotti and Ernst-Ludwig von Thadden (2003). “Strategic Transparency
and Informed Trading: Will Capital Market Integration force Convergence?”.
Journal of Financial and Quantitative Analysis; V.38-#1, pp. 61-85.
■ Zsuzsanna Fluck and Colin Mayer (2005). “Race to the Top or Bottom?
Corporate Governance, Freedom of Reincorporation and Competition in Law”.
Annals of Finance; V.1-#4, 349-378.
● Globalization and Convergence: Evidence
► René Stulz (2005). “The Limits of Financial Globalization”. Journal of Finance;
V.60-#4, pp. 1595-1638.
► Marc Goergen, Marina Martynova and Luc Renneboog (2005). “Corporate
Governance Convergence: Evidence from Takeover Regulation Reforms in
Europe”. Oxford Review of Economic Policy; V.21-#2, pp. 243-268.
► Tarun Khanna, Joe Kogan and Krishna Palepu (2006). “Globalization and
Similarities in Corporate Governance: A Cross-Country Analysis”. Review of
Economics and Statistics; V.88-#1, pp. 69-90.
■ Marco Pagano and Paolo Volpin (2006). “Shareholder Protection, Stock Market
Development, and Politics”. Journal of the European Economic Association; V.4-#2/3, pp. 315-341.
■ W. Carl Kester (1996). “American and Japanese Corporate Governance:
Convergence to Best Practice?”. in S. Berger and R. Dore, eds. National Diversity
and Global Capitalism. Ithaca: Cornell University Press, pp. 107-137.
■ Mauro Gullén (2000). “Corporate Governance and Globalization: Is There
Convergence Across Countries?”. Advances in Comparative International
Management; V.13, pp. 175-204.
■ Stilpon Nestor and John Thompson (2000). “Corporate Governance Patterns in
OECD Economies: Is Convergence Underway?”. In S. Nestor and T. Yasui, eds.
Corporate Governance in Asis: A Comparative Perspective. Paris: OECD, pp. 19-43.
■ Klaus Gugler, Dennis Mueller, and B. Burcin Yurtoglu (2004). “Corporate
Governance and Globalization”. Oxford Review of Economic Policy; V.20-#1, pp.
129-156.
■ Gerald Davis and Christopher Marquis (2005). “The Globalization of Stock
Markets and Convergence in Corporate Governance”. In Victor Nee and Richard
Swedberg, eds. The Economic Sociology of Capitalism. Princeton: PUP, pp. 352-390.
■ Randall Morck and Lloyd Steier (2005). “The Global History of Corporate
Governance: An Introduction”. In Randall Morck, ed. A Global History of
Corporate Governance. Chicago: University of Chicago Press/NBER, pp.
■ Darius Wojcik (2006). “Convergence in Corporate Governance: Evidence from
Europe and the Challenge of Economic Geography”. Journal of Economic
Geography; V.6-#5, pp. 639-660.
● Crisis and Reform: Enron and Sarbanes-Oxley
► Paul Healy and Krishna Palepu (2003). “The Fall of Enron”. Journal of
Economic Perspectives; V.17-#2, pp. 3-26.
► Joel Demski (2003). “Corporate Conflicts of Interest”. Journal of Economic
Perspectives; V.17-#2, pp. 51-72.
► R. Preston McAfee (2004). “The Real Lesson of Enron’s Implosion: Market
Makers Are In the Trust Business”. The Economists’ Voice; V.1-#2, article 4.
► John Coates, IV (2007). “The Goals and Promise of the Sarbanes-Oxley Act”.
Journal of Economic Perspectives; V.21-#1, pp. 3-26.
► Yael Hochberg, Paola Sapienza, and Annette Vissing-Jorgensen (2007). “A
Lobbying Approach to Sarbanes-Oxley”. Journal of Accounting Research; V.47-#2, pp. 519-583.
■ John Coffee (2002). “Understanding Enron: It’s About the Gatekeepers,
Stupid”. Business Lawyer, V.57-#4, pp. 1403-1420.
■ John Coffee (2004). “What Caused Enron?: A Capsule Social and Economic
History of the 1990’s”. Cornell Law Review; V.89-#2, pp. 269-309.
■ Baruch Lev (2003). “Corporate Earnings: Fact and Fiction”. Journal of
Economic Perspectives; V.17-#2, pp. 27-50.
■ Bengt Holmström and Steven Kaplan (2003). “The State of U.S. Corporate
Governance: What’s Right, What’s Wrong”. Journal of Applied Corporate
Governance; V.15-#3, pp. 8-20.
■ Roberta Romano (2005). “The Sarbanes-Oxley Act and the Making of Quack
Corporate Governance”. Yale Law Journal; V.114-#7, pp. 1521-1611.
■ Vidhi Chhaochharia and Yaniv Grinstein (2007). “Corporate Governance and
Firm Value: The Impact of the 2002 Governance Rules”. Journal of Finance;
V.62-#4, pp. 1789-1825.
■ Ivy Zhang (2007). “The Economic Consequences of the Sarbanes-Oxley Act”.
Journal of Accounting and Economics; V.44-#1/2, pp. 74-115.
■ Donald Langevoort (2007). “The Social Construction of Sarbanes-Oxley”.
Michigan Law Review; V.105-#8, pp. 1817-1855.
■ Erik Berglöf (1997). “Reforming Corporate Governance in Europe”. Economic
Policy; V.12-#24, pp. 91-123.
■ Erik Berglöf and Mike Burkart (2003). “European Takeover Regulation”.
Economic Policy; V.18-#36, pp. 171-213.
■ John C. Coffee, Jr (2005). “A Theory of Corporate Scandals: Why the USA and
Europe Differ”. Oxford Review of Economic Policy; V.21-#2, pp. 198-211
■ John Cioffi and Martin Höpner (2006). “The Political Paradox of Finance
Capitalism: Interests, Preferences, and Center-Left Party Politics in Corporate
Governance Reform”. Politics and Society; V.34-#4, pp. 463-502.
■ Luca Enriques and Paolo Volpin (2007). “Corporate Governance Reforms in
Continental Europe”. Journal of Economic Perspectives; V.21-#1, pp. 117-140.
■ Morck, Randall and Bernard Yeung. 2009. “Never Waste a Good Crisis: An
Historical Perspective on Comparative Corporate Governance.” Annual Review of
Financial Economics, 1(1), 145-79.
■ Milhaupt, Curtis J. and Katharina Pistor. 2008. Law and Capitalism: What
Corporate Crises Reveal About Legal Systems and Economic Development
around the World. Chicago: University of Chicago Press.