Week 12 Chapter 11 Corporate Governance

Week 12 Chapter 11 Corporate Governance - Global Master...

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The Separation between Ownership Those that own the firm and those that control the  firm are two separate groups Relatively new in history (about 150 years) Problems of Diverse Ownership Benefit of a particular investor’s efforts accrues to entire  group, but cost of efforts accrue all to the particular  investor A tragedy of the commons of sorts… let’s think about 
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The Separation between Ownership Outside the Anglo World The majority of large corporations throughout continental  Europe, Asia, Latin America, and Africa feature  concentrated family ownership and control State ownership in Russia, China (although there is  privatization) In many developed economies, state ownership is also  high in France, Italy, and Great Britain
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Agency Theory Principal – Agent Relationship: When one party (the 
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Week 12 Chapter 11 Corporate Governance - Global Master...

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