Studies in International Corporate Finance and Governance Systems: A Comparison of the U.S., Japan, and Europe / Edition 1

by Donald Chew

Overview

The past decade has given rise to a growing debate over the relative efficiency of different national economic systems. There are two basic corporate finance and governance systems that predominate in today's developed economies. One is the Anglo-American market based model, with widely dispersed shareholders and a fairly vigorous corporate control market. The other is the Japanese and German relationship based system, with its large bank and intercorporate holdings (and conspicuous absence of takeovers). Given the increasing globalization of business, which of these two systems can be expected to prevail over time? Or will the most valuable aspects of each be blended into a single new system? The story now being told by economists and management experts — one that this book presents — is a complicated one. Here is a sampling of the arguments:
Corporate strategist Michael Porter states that the U.S. system of allocating capital both within and across companies appears to be failing because of both capital market and internal pressures on U.S. companies to underinvest in the relatively intangible assets that contribute to corporate capabilities. In contrast to Porter, financial economist Michael Jensen maintains that the most formidable challenge now facing the U.S. economy — and, indeed, the economies of all industrialized nations — is the corporate overinvestment problem, a problem that was addressed in the U.S. by the leveraged restructuring of the 1980s. Nobel-Prize economist Merton Miller answers both Porters concern about U.S. underinvestment and Jensens pessimism about U.S. control systems with a classic defense of the shareholder-value principle. Corporate strategist C.K. Prahalad, unconvinced by the arguments of both Miller and Jensen, challenges the wisdom of corporate Americas commitment to maximizing shareholder value. In a roundtable discussion, Prahalad debates with shareholder value advocate Bennett Stewart about the effects of shareholder primacy in the U.S. and its absence in Japan.
Studies in International Corporate Finance and Governance Systems consists of 28 articles (and two roundtable discussions) written by academic and management experts in the fields of corporate finance and governance. Given its commitment to translating outstanding academic research into relatively plain English for practicing businessmen, this text should prove especially useful for corporate executives as well as students in MBA and executive development programs.

Product Details

ISBN-13:	9780195107951
Publisher:	Oxford University Press
Publication date:	01/16/1997
Edition description:	New Edition
Pages:	384
Product dimensions:	9.20(w) x 7.52(h) x 0.79(d)

About the Author

Donald H. Chew was a founding partner of Stern Stewart & Co., the New York based corporate finance firm, and is Editor of Bank of America's Journal of Applied Corporate Finance. He holds a Ph.D. in English and American Literature and an MBA in Finance from the University of Rochester.

Table of Contents

I. INTRODUCTION1. CAPITAL CHOICES: CHANGING THE WAY AMERICA INVESTS IN INDUSTRY, Michael Porter, iHarvard Business School/i2. THE MODERN INDUSTRIAL REVOLUTION, EXIT, AND THE FAILURE OF INTERNAL CONTROL SYSTEMS, Michael Jensen, iHarvard Business School/i3. IS AMERICAN CORPORATE GOVERNANCE FATALLY FLAWED?, Merton H. Miller, iUniversity of Chicago/i4. CORPORATE GOVERNANCE OR CORPORATE VALUE ADDED?: RETHINKING THE PRIMACY OF SHAREHOLDER VALUE, C. K. Prahalad, iUniversity of Michigan/i5. CONTINENTAL BANK ROUNDTABLE ON GLOBAL COMPETITION IN THE '90sModerated by Bennett Stewart. Panelists: C. K. Prahalad, University of Michigan; Charles Clough, CEO, Wyle Laboratories; Dennis Eck, CEO, The Vons Companies; Frank Perna, CEO, Magnetek; Robert Perry, CFO, Dames & Moore, Inc.; Edward Thompson, CFO, Amdahl Corporation; and Len Williams, CEO, MacFrugal's. (22)II. THE U.S.Corporate Restructuring: The 1980s6. THE CORPORATE RESTRUCTURING OF THE 1980s—AND ITS IMPORT FOR THE 1990s, Gordon Donaldson, iHarvard Business School/i7. THE TAKEOVER WAVE OF THE 1980s, Andrei Shleifer, iHarvard Business School/i and Robert Vishny, iUniversity of Chicago/i8. REVERSING CORPORATE DIVERSIFICATION, Amar Bhide, iHarvard Business School/i9. MANAGING FOR SHAREHOLDERS IN A SHRINKING INDUSTRY: THE CASE OF GRUMMAN, Renso Caporali, CEO, iGrumman Corp./i10. CORPORATE GOVERNANCE LESSONS FROM A MIDDLE MARKET LBO: THE CASE OF OM SCOTT, George Baker and Karen Wruck, iHarvard Business School/i11. THE STAYING POWER OF LEVERAGED BUYOUTS, Steven Kaplan, iUniversity of Chicago/iRelationship Investing: The 1990s12. RAIDERS, TARGETS, AND POLITICS: THE HISTORY AND FUTURE OF AMERICAN CORPORATE CONTROL, John Pound, iHarvard University/i13. INSTITUTIONAL INVESTORS AND CORPORATE GOVERNANCE: THE CASE FOR INSTITUTIONAL VOICE, Bernard S. Black, iColumbia Law School/i14. MUTUAL FUNDS IN THE BOARDROOM, Mark Roe, olumbia University15. REGULATING THE EQUITY COMPONENT OF CAPITAL STRUCTURE: THE SEC'S RESPONSE TO THE ONE SHARE-ONE VOTE CONTROVERSY, Ronald J. Gilson, Stanford University and Columbia University16. BUILDING RELATIONSHIPS WITH MAJOR SHAREHOLDERS: A CASE STUDY OF LOCKHEED, John Pound, iHarvard University/i and Walter Skowronski, iLockheed Corp./i17. STERN STEWART ROUNDTABLE ON RELATIONSHIP INVESTING AND SHAREHOLDER COMMUNICATIONPanelists: Basil Anderson, Scott Paper Co.; Carolyn Brancato, Columbia Law School; Geoffrey Colvin, Fortune; Judith Dobrzynski, Business Week; Alex Lehmann; Nell Minow, The Lens Fund; Krishna Palepu, Harvard University; Edward Reagan, New York State Comptroller; Joseph Shelton, OLC Corp.; Derek Smith, Equifax Inc.; Eugene Vesell, Oppenheimer Capital; Jerold Zimmerman, University of Rochester Moderated Joel Stern and Bennett Stewart.III. JAPAN (AND GERMANY)18. GOVERNANCE, CONTRACTING, AND INVESTMENT HORIZONS: A LOOK AND JAPAN AND GERMANY, Carl Kester, iHarvard Business School/i19. TO WHOM DOES THE COMPANY BELONG?: A NEW MANAGEMENT MISSION FOR THE INFORMATION AGE, Joichi AOI, Chairman, Toshiba Corporation20. CORPORATE GOVERNANCE AND CORPORATE PERFORMANCE, Steven Kaplan, iUniversity of Chicago/i21. THE HIDDEN COSTS OF JAPANESE SUCCESS, Carl Kester iHarvard Business School/i22. REDRESSING STRUCTURAL IMBALANCES IN JAPANESE CORPORATE GOVERANCE: AN INTERNATIONAL PERSPECTIVE, Howard Sherman and Bruce Babcock, iInstitutional Shareholder Services/iIV. EUROPE (AND SOUTH AFRICA)23. CORPORATE OWNERSHIP STRUCTURE IN THE U.K., FRANCE, AND GERMANY, Julian Franks iLondon Business School/i and Colin Mayer iOxford University/i24. SHAREHOLDERS AS AGENTS AND PRINCIPALS: THE CASE FOR SOUTH AFRICA'S CORPORATE GOVERNANCE SYSTEM, Graham Barr, Jos Gerson, and Brian Kantor, iUniversity of Cape Town/i25. CORPORATE RESTRUCTURING, BUY-OUTS, AND MANAGERIAL EQUITY: THE EUROPEAN DIMENSION, Mike Wright and Ken Robbie, iUniversity of Nottingham/i and Steve Thompson, iUniversity of Manchester/i26. PERSPECTIVES ON RESTRUCTURING IN EUROPE: INTERVIEWS WITH FOUR EUROPEAN EXECUTIVES, Christopher Bland, LWT; Manfred Klein iBenckiser/i; Henri Blanchet and Christian Moretti, iDynaction/i27. THE ECONOMIC IMPORT OF EUROPE 1992, Alan C. Shapiro, iUniversity of Southern California/i28. CORPORATE GOVERNANCE CHANGES MAKE INROADS IN EUROPE, Howard Sherman, iInstitutional Shareholder Services/iV. EVA: A NEW APPROACH TO CORPORATE GOVERNANCE29. THE EVA FINANCIAL MANAGEMENT SYSTEM, Joel Stern, Bennett Stewart, and Donald Chew, iStern Stewart & Co./i30. TOTAL COMPENSATION STRATEGY, Stephen O'Byrne iStern Stewart & Co./i