Andrei Shleifer
- Published in print:
- 2000
- Published Online:
- November 2003
- ISBN:
- 9780198292272
- eISBN:
- 9780191596933
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198292279.001.0001
- Subject:
- Economics and Finance, Financial Economics
This book describes an approach, alternative to the theory of efficient markets, to the study of financial markets: behavioural finance. It begins by assessing the efficient market hypothesis, ...
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This book describes an approach, alternative to the theory of efficient markets, to the study of financial markets: behavioural finance. It begins by assessing the efficient market hypothesis, emphasising how some of its foundations are contradicted by psychological and institutional evidence. It then introduces the theory of behavioural finance and devotes the rest of the book to explore its main aspects, concentrating on the role and characteristics of noise traders, arbitrageurs, and investors. Chapters 2 through 4 focus on the limits imposed on arbitrage by factors such as risk aversion or agency problems. Two crucial conclusions are reached. First, plausible theories of arbitrage do not lead to the prediction that markets are efficient—quite the opposite. Second, the recognition that arbitrage is limited, even without specific assumptions about investor sentiment, generates new empirically testable predictions, some of which have been confirmed in the data. Chapters 5 and 6 centre on how investor sentiments are built, emphasising some empirical violations to the idea of efficient markets such as price bubbles. The book concludes suggesting that the theory of behavioural finance is indeed more effective that the efficient market theory in explaining some financial evidence.Less
This book describes an approach, alternative to the theory of efficient markets, to the study of financial markets: behavioural finance. It begins by assessing the efficient market hypothesis, emphasising how some of its foundations are contradicted by psychological and institutional evidence. It then introduces the theory of behavioural finance and devotes the rest of the book to explore its main aspects, concentrating on the role and characteristics of noise traders, arbitrageurs, and investors. Chapters 2 through 4 focus on the limits imposed on arbitrage by factors such as risk aversion or agency problems. Two crucial conclusions are reached. First, plausible theories of arbitrage do not lead to the prediction that markets are efficient—quite the opposite. Second, the recognition that arbitrage is limited, even without specific assumptions about investor sentiment, generates new empirically testable predictions, some of which have been confirmed in the data. Chapters 5 and 6 centre on how investor sentiments are built, emphasising some empirical violations to the idea of efficient markets such as price bubbles. The book concludes suggesting that the theory of behavioural finance is indeed more effective that the efficient market theory in explaining some financial evidence.
Roderick Martin, Peter D. Casson, and Tahir M. Nisar
- Published in print:
- 2007
- Published Online:
- September 2007
- ISBN:
- 9780199202607
- eISBN:
- 9780191707896
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199202607.001.0001
- Subject:
- Business and Management, Finance, Accounting, and Banking
Increased engagement by investors with the companies in which they invest has been a major change in Western economies since the 1980s. Shareholder value provides rationale and incentive for investor ...
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Increased engagement by investors with the companies in which they invest has been a major change in Western economies since the 1980s. Shareholder value provides rationale and incentive for investor engagement. The book summarizes the basic principles of shareholder value, and explains the reasons for its growth, especially in the UK and the USA. The authors outline a spectrum of investor engagement ranging from indirect/laissez-faire influence via (threat of) exit to direct intervention in specific areas of management practice. The book focuses on two types of investor, institutional investors and private equity/venture capital investors. Different types of institutional investors have different incentives for engagement, and adopt different methods. ‘Universal investors’ with long time horizons, such as pension funds, have especially strong incentives for engagement, as illustrated by USS Limited. The book distinguishes between institutional investors' routine and extraordinary engagement, and shows how collaboration amongst investors through organizations such as the Institutional Shareholders' Committee offsets the high costs of monitoring and provides means for ensuring compliance with ‘best City practice’. The engagement of private equity funds is illustrated through case studies of equity funds and the portfolio firms in which they invested. But corporate managers are not simply passive reactors to investors' interventions: managers seek to influence investors, for example through managing market expectations. Shareholder value conceptions are not universal: they are strong in the UK and the USA, but are weaker in coordinated market economies such as Germany. The book concludes by evaluating the normative case for shareholder value and investor engagement, arguing that conventional analyses overestimate the efficiency arguments for shareholder value and the equity arguments against shareholder value. The future development of corporate governance is seen to require greater openness and the inclusion of a wider range of interests, not the further enhancement of the protection accorded to shareholder interests.Less
Increased engagement by investors with the companies in which they invest has been a major change in Western economies since the 1980s. Shareholder value provides rationale and incentive for investor engagement. The book summarizes the basic principles of shareholder value, and explains the reasons for its growth, especially in the UK and the USA. The authors outline a spectrum of investor engagement ranging from indirect/laissez-faire influence via (threat of) exit to direct intervention in specific areas of management practice. The book focuses on two types of investor, institutional investors and private equity/venture capital investors. Different types of institutional investors have different incentives for engagement, and adopt different methods. ‘Universal investors’ with long time horizons, such as pension funds, have especially strong incentives for engagement, as illustrated by USS Limited. The book distinguishes between institutional investors' routine and extraordinary engagement, and shows how collaboration amongst investors through organizations such as the Institutional Shareholders' Committee offsets the high costs of monitoring and provides means for ensuring compliance with ‘best City practice’. The engagement of private equity funds is illustrated through case studies of equity funds and the portfolio firms in which they invested. But corporate managers are not simply passive reactors to investors' interventions: managers seek to influence investors, for example through managing market expectations. Shareholder value conceptions are not universal: they are strong in the UK and the USA, but are weaker in coordinated market economies such as Germany. The book concludes by evaluating the normative case for shareholder value and investor engagement, arguing that conventional analyses overestimate the efficiency arguments for shareholder value and the equity arguments against shareholder value. The future development of corporate governance is seen to require greater openness and the inclusion of a wider range of interests, not the further enhancement of the protection accorded to shareholder interests.
Christopher Balding
- Published in print:
- 2012
- Published Online:
- May 2012
- ISBN:
- 9780199842902
- eISBN:
- 9780199932498
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199842902.001.0001
- Subject:
- Economics and Finance, Financial Economics
Sovereign wealth funds are a dynamic and sizeable force in international finance. There is surprisingly little information about their history, economics, investments, and politics. This book seeks ...
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Sovereign wealth funds are a dynamic and sizeable force in international finance. There is surprisingly little information about their history, economics, investments, and politics. This book seeks to provide a better understanding of sovereign wealth funds beginning with their history and their evolution from small stabilization funds into major institutional investors. Then the book turns to the economics and finance of sovereign wealth funds seeking to understand the unique challenges facing states that establish sovereign wealth funds and how well they accomplish their task of stabilizing small oil dependent states and managing surplus capital reserves. Despite the focus on the potential for sovereign wealth funds to leverage their financial capital into foreign policy influence, the political ramifications of concentrated public wealth is demonstrated through distorted local economies and stunted domestic politics. Using a variety of case studies from major and unique sovereign wealth fund states coupled with an analysis of their historical, economic, and financial framework, this books lays out a framework of the challenges facing sovereign wealth funds and their founding states.Less
Sovereign wealth funds are a dynamic and sizeable force in international finance. There is surprisingly little information about their history, economics, investments, and politics. This book seeks to provide a better understanding of sovereign wealth funds beginning with their history and their evolution from small stabilization funds into major institutional investors. Then the book turns to the economics and finance of sovereign wealth funds seeking to understand the unique challenges facing states that establish sovereign wealth funds and how well they accomplish their task of stabilizing small oil dependent states and managing surplus capital reserves. Despite the focus on the potential for sovereign wealth funds to leverage their financial capital into foreign policy influence, the political ramifications of concentrated public wealth is demonstrated through distorted local economies and stunted domestic politics. Using a variety of case studies from major and unique sovereign wealth fund states coupled with an analysis of their historical, economic, and financial framework, this books lays out a framework of the challenges facing sovereign wealth funds and their founding states.
Jacques Werner
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199578184
- eISBN:
- 9780191722561
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199578184.003.0006
- Subject:
- Law, Human Rights and Immigration, Public International Law
This chapter explains why investor-state arbitration is often wrongfully likened to international commercial arbitration among private parties. Investor-state arbitrations involve not only private ...
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This chapter explains why investor-state arbitration is often wrongfully likened to international commercial arbitration among private parties. Investor-state arbitrations involve not only private business interests but also public policies of the host state and citizen rights. Arbitral awards on investor-state disputes risk lacking credibility and democratic acceptability if they overrule, in non-transparent proceedings, democratically legitimate government decisions on grounds of investor-state contracts. Similar to the introduction of appellate review in the GATT/WTO dispute settlement system, the transparency, legitimacy, and legal coherence of investor-state arbitration could be enhanced by introduction of an appellate instance.Less
This chapter explains why investor-state arbitration is often wrongfully likened to international commercial arbitration among private parties. Investor-state arbitrations involve not only private business interests but also public policies of the host state and citizen rights. Arbitral awards on investor-state disputes risk lacking credibility and democratic acceptability if they overrule, in non-transparent proceedings, democratically legitimate government decisions on grounds of investor-state contracts. Similar to the introduction of appellate review in the GATT/WTO dispute settlement system, the transparency, legitimacy, and legal coherence of investor-state arbitration could be enhanced by introduction of an appellate instance.
Norman Flynn
- Published in print:
- 1999
- Published Online:
- October 2011
- ISBN:
- 9780198295525
- eISBN:
- 9780191685125
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198295525.001.0001
- Subject:
- Business and Management, International Business, Political Economy
The crisis in Asia has caused economic hardship and brought an end to the ‘economic miracle’ of fast economic growth in the region. This book asks whether the 1997/8 crisis marks a break with the ...
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The crisis in Asia has caused economic hardship and brought an end to the ‘economic miracle’ of fast economic growth in the region. This book asks whether the 1997/8 crisis marks a break with the past and signals an end to ‘Asian’ ways of running economies. During the period of rapid growth there were strong connections between governments and business in the region. ‘Cronyism’, or close connections between family, business, and government, was exposed when the stock markets and currencies dived. Pressure from overseas investors and international organisations has produced reforms in the region. The book examines the social, economic, and political modes of governance in the region. It finds that there is a shifting balance between rule by the market, rule by connections, and rule by force. In the sphere of economic management, it shows that the period of the ‘developmental state’ in Japan and Korea has come to an end, but that it has not yet been replaced by a liberal market. Elsewhere the close connections between governments and business have been weakened but not yet broken. There are still special ‘Asian’ characteristics in economic management and in politics. The forces of ‘globalisation’ are strong, but they are confronted with political and economic cultures that are not rooted in liberal market ethics.Less
The crisis in Asia has caused economic hardship and brought an end to the ‘economic miracle’ of fast economic growth in the region. This book asks whether the 1997/8 crisis marks a break with the past and signals an end to ‘Asian’ ways of running economies. During the period of rapid growth there were strong connections between governments and business in the region. ‘Cronyism’, or close connections between family, business, and government, was exposed when the stock markets and currencies dived. Pressure from overseas investors and international organisations has produced reforms in the region. The book examines the social, economic, and political modes of governance in the region. It finds that there is a shifting balance between rule by the market, rule by connections, and rule by force. In the sphere of economic management, it shows that the period of the ‘developmental state’ in Japan and Korea has come to an end, but that it has not yet been replaced by a liberal market. Elsewhere the close connections between governments and business have been weakened but not yet broken. There are still special ‘Asian’ characteristics in economic management and in politics. The forces of ‘globalisation’ are strong, but they are confronted with political and economic cultures that are not rooted in liberal market ethics.
Roderick Martin, Peter D. Casson, and Tahir M. Nisar
- Published in print:
- 2007
- Published Online:
- September 2007
- ISBN:
- 9780199202607
- eISBN:
- 9780191707896
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199202607.003.0004
- Subject:
- Business and Management, Finance, Accounting, and Banking
Institutional investors adopt different methods of engagement. Much investor engagement is routine and informal; other engagement is extraordinary and arises from specific circumstances, such as ...
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Institutional investors adopt different methods of engagement. Much investor engagement is routine and informal; other engagement is extraordinary and arises from specific circumstances, such as firms adopting remuneration policies which are viewed as inconsistent with ‘best City practice’. Routine engagement is conducted by individual investors. But extraordinary engagement is usually conducted through collective organizations, such as the Institutional Shareholders' Committee, as a means of reducing the costs of monitoring and intervening and addressing ‘free rider’ problems.Less
Institutional investors adopt different methods of engagement. Much investor engagement is routine and informal; other engagement is extraordinary and arises from specific circumstances, such as firms adopting remuneration policies which are viewed as inconsistent with ‘best City practice’. Routine engagement is conducted by individual investors. But extraordinary engagement is usually conducted through collective organizations, such as the Institutional Shareholders' Committee, as a means of reducing the costs of monitoring and intervening and addressing ‘free rider’ problems.
Roderick Martin, Peter D. Casson, and Tahir M. Nisar
- Published in print:
- 2007
- Published Online:
- September 2007
- ISBN:
- 9780199202607
- eISBN:
- 9780191707896
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199202607.003.0006
- Subject:
- Business and Management, Finance, Accounting, and Banking
Managers seek to manage their relations with investors, as with other stakeholders. This chapter outlines three elements in managerial handling of investors. The first is the role of the board of ...
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Managers seek to manage their relations with investors, as with other stakeholders. This chapter outlines three elements in managerial handling of investors. The first is the role of the board of directors, especially the role of non-executive directors. The second is the management of relations with actual or potential investors in the firm. The third is the management of relations with the investment community. It shows the pattern of interdependence between managers and investors, rather than dominance by either side.Less
Managers seek to manage their relations with investors, as with other stakeholders. This chapter outlines three elements in managerial handling of investors. The first is the role of the board of directors, especially the role of non-executive directors. The second is the management of relations with actual or potential investors in the firm. The third is the management of relations with the investment community. It shows the pattern of interdependence between managers and investors, rather than dominance by either side.
Paolo Mauro, Nathan Sussman, and Yishay Yafeh
- Published in print:
- 2006
- Published Online:
- May 2006
- ISBN:
- 9780199272693
- eISBN:
- 9780191603488
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199272697.003.0002
- Subject:
- Economics and Finance, Financial Economics
This chapter describes the pre-World War I London market for sovereign bonds issued by emerging countries, and compares it with the corresponding market today. It shows that the London market was ...
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This chapter describes the pre-World War I London market for sovereign bonds issued by emerging countries, and compares it with the corresponding market today. It shows that the London market was large, active, and liquid, far larger than the corresponding market of today. Moreover, investors were able to rely on timely and comprehensive information regarding borrowing countries. The chapter then discusses the construction of the data sets used in the book, and analyzes the behavior of bond spreads in the historical and modern samples.Less
This chapter describes the pre-World War I London market for sovereign bonds issued by emerging countries, and compares it with the corresponding market today. It shows that the London market was large, active, and liquid, far larger than the corresponding market of today. Moreover, investors were able to rely on timely and comprehensive information regarding borrowing countries. The chapter then discusses the construction of the data sets used in the book, and analyzes the behavior of bond spreads in the historical and modern samples.
Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.003.0006
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter extends the analysis of the previous chapter to an open economy by introducing exchange rate policy; analyzing the complex relationships between exchange rate, fiscal, and monetary ...
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This chapter extends the analysis of the previous chapter to an open economy by introducing exchange rate policy; analyzing the complex relationships between exchange rate, fiscal, and monetary policies; and examining the ways in which capital flows complicate traditional analyses. Despite the greater complexities associated with open economy macroeconomics, the policy conclusions for a closed economy remain remarkably unaffected. While Keynesians and heterodox economists believe that government should actively intervene, conservatives remain skeptical about the desirability of such interventions. The objective of this chapter is to shed some light on how economists can come to such diverse views on economic policy. The first section examines the macroeconomic effects of exchange rates on employment, trade, inflation, aggregate demand, growth, and balance sheets. The second section examines the complex interactions between fiscal, monetary, and exchange rate policies in open economies with either fixed or flexible exchange rate regimes. This section also examines the effects of interest rates and exchange rates on capital flows in both crisis and non-crisis situations.Less
This chapter extends the analysis of the previous chapter to an open economy by introducing exchange rate policy; analyzing the complex relationships between exchange rate, fiscal, and monetary policies; and examining the ways in which capital flows complicate traditional analyses. Despite the greater complexities associated with open economy macroeconomics, the policy conclusions for a closed economy remain remarkably unaffected. While Keynesians and heterodox economists believe that government should actively intervene, conservatives remain skeptical about the desirability of such interventions. The objective of this chapter is to shed some light on how economists can come to such diverse views on economic policy. The first section examines the macroeconomic effects of exchange rates on employment, trade, inflation, aggregate demand, growth, and balance sheets. The second section examines the complex interactions between fiscal, monetary, and exchange rate policies in open economies with either fixed or flexible exchange rate regimes. This section also examines the effects of interest rates and exchange rates on capital flows in both crisis and non-crisis situations.
Joseph E. Stiglitz, José Antonio Ocampo, Shari Spiegel, Ricardo Ffrench-Davis, and Deepak Nayyar
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780199288144
- eISBN:
- 9780191603884
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199288143.003.0011
- Subject:
- Economics and Finance, Development, Growth, and Environmental
Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially ...
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Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially in developing countries, that these models did not consider. This chapter focuses on major categories of ‘market failures’. It examines the direct externalities associated with capital flows, and looks at how capital market liberalization can exacerbate the problems posed by coordination failures and broader macroeconomic failures. It also looks at the effect of imperfect information on investor behavior and the market failures associated with capital markets. It concludes with a discussion of the major objectives of government intervention.Less
Underlying the failure of CML was an overly simple model that assumed efficient and complete markets. There are, however, problems with externalities and weak or absent insurance markets, especially in developing countries, that these models did not consider. This chapter focuses on major categories of ‘market failures’. It examines the direct externalities associated with capital flows, and looks at how capital market liberalization can exacerbate the problems posed by coordination failures and broader macroeconomic failures. It also looks at the effect of imperfect information on investor behavior and the market failures associated with capital markets. It concludes with a discussion of the major objectives of government intervention.
Richard Youngs
- Published in print:
- 2004
- Published Online:
- January 2005
- ISBN:
- 9780199274468
- eISBN:
- 9780191602030
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199274460.003.0001
- Subject:
- Political Science, Democratization
This introductory chapter sets out the goals for this study amidst ongoing debates on the international dimensions of democratisation. It outlines the state of academic thinking on democracy’s ...
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This introductory chapter sets out the goals for this study amidst ongoing debates on the international dimensions of democratisation. It outlines the state of academic thinking on democracy’s relationship to international security concerns, and the interests of international investors. It highlights democracy’s strategic and economic utility, and calls for a more composite picture of its international dimensions.Less
This introductory chapter sets out the goals for this study amidst ongoing debates on the international dimensions of democratisation. It outlines the state of academic thinking on democracy’s relationship to international security concerns, and the interests of international investors. It highlights democracy’s strategic and economic utility, and calls for a more composite picture of its international dimensions.
Mia de Kuijper
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780195171631
- eISBN:
- 9780199871353
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195171631.003.0007
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 5 takes an in-depth look at how transparency will affect the four essential strategic questions that all corporate leaders and investors need to address to maximizing returns: what to own, or ...
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Chapter 5 takes an in-depth look at how transparency will affect the four essential strategic questions that all corporate leaders and investors need to address to maximizing returns: what to own, or where to focus ownership; what business model is best; how to beat new competitive threats—and what these will be like; and what marketplace strategy best utilizes the new dynamics in mass markets.Less
Chapter 5 takes an in-depth look at how transparency will affect the four essential strategic questions that all corporate leaders and investors need to address to maximizing returns: what to own, or where to focus ownership; what business model is best; how to beat new competitive threats—and what these will be like; and what marketplace strategy best utilizes the new dynamics in mass markets.
Mia de Kuijper
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780195171631
- eISBN:
- 9780199871353
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195171631.003.0012
- Subject:
- Economics and Finance, Macro- and Monetary Economics
In Chapter 11, the conclusions of Chapters 6–10 are used to derive the Four Rules for Maximizing Profits in Transparency for investors and for corporate leaders. Each of the four rules revolves ...
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In Chapter 11, the conclusions of Chapters 6–10 are used to derive the Four Rules for Maximizing Profits in Transparency for investors and for corporate leaders. Each of the four rules revolves around the use of a power node.Less
In Chapter 11, the conclusions of Chapters 6–10 are used to derive the Four Rules for Maximizing Profits in Transparency for investors and for corporate leaders. Each of the four rules revolves around the use of a power node.
Mia de Kuijper
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780195171631
- eISBN:
- 9780199871353
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195171631.003.0015
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 14 introduces the The Four Rules for Maximizing Profits in Transparency Method and presents a series of step-by-step templates for evaluation and action plans that should be implemented by ...
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Chapter 14 introduces the The Four Rules for Maximizing Profits in Transparency Method and presents a series of step-by-step templates for evaluation and action plans that should be implemented by any business leader or investor who is seriously interested in extraordinary returns. Chapter 15 through 18 contain the operating instructions for implementation of the Four Rules and for using power nodes. These guidelines are illustrated with many specific examples that successful companies have used, as well as with lessons from avoidable mistakes.Less
Chapter 14 introduces the The Four Rules for Maximizing Profits in Transparency Method and presents a series of step-by-step templates for evaluation and action plans that should be implemented by any business leader or investor who is seriously interested in extraordinary returns. Chapter 15 through 18 contain the operating instructions for implementation of the Four Rules and for using power nodes. These guidelines are illustrated with many specific examples that successful companies have used, as well as with lessons from avoidable mistakes.
Roy C. Smith and Ingo Walter
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195171679
- eISBN:
- 9780199783618
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195171675.001.0001
- Subject:
- Economics and Finance, Microeconomics
This book examines the effective governance, monitoring, and control of corporations and financial markets, drawing on the lessons of history and with a firm focus on the future. The book is divided ...
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This book examines the effective governance, monitoring, and control of corporations and financial markets, drawing on the lessons of history and with a firm focus on the future. The book is divided into four parts. Part I consists of two chapters: the first considers the nature, effects, and consequences of the bubble of 1995-2000; the second chapter assesses the more fundamental effects related to the evolving dominance of capital markets, which has changed the way corporate executives perceive their role and the expectations they are required to meet. Part II consists of three chapters that explore the internal governance function of corporations. Part III includes three chapters that examine the modern roles and practices of institutional investors, auditors, and banks and brokerages in conducting the fiduciary and governance functions allocated to them in the capital-market system. Part IV examines the evolution of the legal and regulatory system supporting the markets, and focuses on its troubling impotence as a consequence of modern political realities. It analyzes how conflicts of interest have become a more serious threat to the well-being of the market system than before.Less
This book examines the effective governance, monitoring, and control of corporations and financial markets, drawing on the lessons of history and with a firm focus on the future. The book is divided into four parts. Part I consists of two chapters: the first considers the nature, effects, and consequences of the bubble of 1995-2000; the second chapter assesses the more fundamental effects related to the evolving dominance of capital markets, which has changed the way corporate executives perceive their role and the expectations they are required to meet. Part II consists of three chapters that explore the internal governance function of corporations. Part III includes three chapters that examine the modern roles and practices of institutional investors, auditors, and banks and brokerages in conducting the fiduciary and governance functions allocated to them in the capital-market system. Part IV examines the evolution of the legal and regulatory system supporting the markets, and focuses on its troubling impotence as a consequence of modern political realities. It analyzes how conflicts of interest have become a more serious threat to the well-being of the market system than before.
Roy C. Smith and Ingo Walter
- Published in print:
- 2006
- Published Online:
- September 2006
- ISBN:
- 9780195171679
- eISBN:
- 9780199783618
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0195171675.003.0006
- Subject:
- Economics and Finance, Microeconomics
This chapter explores the critical role of institutional investors as fiduciaries and in the governance of public companies. These institutions have more frequently encountered agency conflicts as ...
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This chapter explores the critical role of institutional investors as fiduciaries and in the governance of public companies. These institutions have more frequently encountered agency conflicts as the complexities of their businesses (managing pension funds, mutual funds, and 401ks of various types for both corporate and individual accounts) and competitive pressures have increased. They are powerful players in exercising control rights. As an industry, they can make the difference between governance successes and failures.Less
This chapter explores the critical role of institutional investors as fiduciaries and in the governance of public companies. These institutions have more frequently encountered agency conflicts as the complexities of their businesses (managing pension funds, mutual funds, and 401ks of various types for both corporate and individual accounts) and competitive pressures have increased. They are powerful players in exercising control rights. As an industry, they can make the difference between governance successes and failures.
Noel Maurer
- Published in print:
- 2013
- Published Online:
- October 2017
- ISBN:
- 9780691155821
- eISBN:
- 9781400846603
- Item type:
- book
- Publisher:
- Princeton University Press
- DOI:
- 10.23943/princeton/9780691155821.001.0001
- Subject:
- Economics and Finance, International
Throughout the twentieth century, the U.S. government willingly deployed power, hard and soft, to protect American investments all around the globe. Why did the United States get into the business of ...
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Throughout the twentieth century, the U.S. government willingly deployed power, hard and soft, to protect American investments all around the globe. Why did the United States get into the business of defending its citizens' property rights abroad? This book looks at how modern U.S. involvement in the empire business began, how American foreign policy became increasingly tied to the sway of private financial interests, and how postwar administrations finally extricated the United States from economic interventionism, even though the government had the will and power to continue. The book examines the ways that American investors initially influenced their government to intercede to protect investments in locations such as Central America and the Caribbean. Costs were small—at least at the outset—but with each incremental step, American policy became increasingly entangled with the goals of those they were backing, making disengagement more difficult. The book discusses how, all the way through the 1970s, the United States not only failed to resist pressure to defend American investments, but also remained unsuccessful at altering internal institutions of other countries in order to make property rights secure in the absence of active American involvement. Foreign nations expropriated American investments, but in almost every case the U.S. government's employment of economic sanctions or covert action obtained market value or more in compensation—despite the growing strategic risks. The advent of institutions focusing on international arbitration finally gave the executive branch a credible political excuse not to act. The book cautions that these institutions are now under strain and that a collapse might open the empire trap once more.Less
Throughout the twentieth century, the U.S. government willingly deployed power, hard and soft, to protect American investments all around the globe. Why did the United States get into the business of defending its citizens' property rights abroad? This book looks at how modern U.S. involvement in the empire business began, how American foreign policy became increasingly tied to the sway of private financial interests, and how postwar administrations finally extricated the United States from economic interventionism, even though the government had the will and power to continue. The book examines the ways that American investors initially influenced their government to intercede to protect investments in locations such as Central America and the Caribbean. Costs were small—at least at the outset—but with each incremental step, American policy became increasingly entangled with the goals of those they were backing, making disengagement more difficult. The book discusses how, all the way through the 1970s, the United States not only failed to resist pressure to defend American investments, but also remained unsuccessful at altering internal institutions of other countries in order to make property rights secure in the absence of active American involvement. Foreign nations expropriated American investments, but in almost every case the U.S. government's employment of economic sanctions or covert action obtained market value or more in compensation—despite the growing strategic risks. The advent of institutions focusing on international arbitration finally gave the executive branch a credible political excuse not to act. The book cautions that these institutions are now under strain and that a collapse might open the empire trap once more.
Michel Goyer
- Published in print:
- 2007
- Published Online:
- September 2008
- ISBN:
- 9780199206483
- eISBN:
- 9780191709715
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199206483.003.0007
- Subject:
- Business and Management, Political Economy
The research question of this chapter on corporate governance in France and Germany is two-pronged: to account for their different patterns of evolution, and to assess the implications for their ...
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The research question of this chapter on corporate governance in France and Germany is two-pronged: to account for their different patterns of evolution, and to assess the implications for their respective models of capitalism. The focus indicator of this chapter is the rise of hedge and mutual funds — two categories of short-term, impatient investors — in large French and German companies. The presence of these two types of institutional investors with their focus on shareholder value and the short-term trading strategies constitutes a novel and potentially radical developments in European corporate governance. The empirical data on the investment patterns of these two groups of investors reveals the greater attractiveness of French firms over their German counterparts. The argument presented in this chapter highlights the importance of firm-level institutional arrangements of workplace organization in accounting for this divergence in investment patterns. The high degree of power concentration of French firms provides for a better fit with the short-term horizons of hedge and mutual funds. Patterns of adjustment in French companies are unilaterally orchestrated, in sharp contrast to the negotiated nature of restructuring strategies in German firms. Key notions of the Varieties of Capitalism perspective — institutional interaction, institutional latency, and the distinction between institutional framework and the mode of coordination that follows from these institutions — illustrate the central role performed by firm-level institutional arrangements of workplace organization, and provide important theoretical insights to account for the divergence in the investment patterns of hedge and mutual funds.Less
The research question of this chapter on corporate governance in France and Germany is two-pronged: to account for their different patterns of evolution, and to assess the implications for their respective models of capitalism. The focus indicator of this chapter is the rise of hedge and mutual funds — two categories of short-term, impatient investors — in large French and German companies. The presence of these two types of institutional investors with their focus on shareholder value and the short-term trading strategies constitutes a novel and potentially radical developments in European corporate governance. The empirical data on the investment patterns of these two groups of investors reveals the greater attractiveness of French firms over their German counterparts. The argument presented in this chapter highlights the importance of firm-level institutional arrangements of workplace organization in accounting for this divergence in investment patterns. The high degree of power concentration of French firms provides for a better fit with the short-term horizons of hedge and mutual funds. Patterns of adjustment in French companies are unilaterally orchestrated, in sharp contrast to the negotiated nature of restructuring strategies in German firms. Key notions of the Varieties of Capitalism perspective — institutional interaction, institutional latency, and the distinction between institutional framework and the mode of coordination that follows from these institutions — illustrate the central role performed by firm-level institutional arrangements of workplace organization, and provide important theoretical insights to account for the divergence in the investment patterns of hedge and mutual funds.
Ronald Dore
- Published in print:
- 2009
- Published Online:
- February 2010
- ISBN:
- 9780199563630
- eISBN:
- 9780191721359
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199563630.003.0005
- Subject:
- Business and Management, Corporate Governance and Accountability, HRM / IR
In this chapter, Ronald Dore contrasts the rhetoric about the Japanese corporation's duties to multiple stakeholders, and the absence of proposals to modify the extent to which the law makes ...
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In this chapter, Ronald Dore contrasts the rhetoric about the Japanese corporation's duties to multiple stakeholders, and the absence of proposals to modify the extent to which the law makes shareholders the sole sovereign controller of the fate of companies. Under the “new orthodoxy” it has become difficult to publicly defend practices such as reciprocal shareholding, which shielded companies from hostile takeovers in the past, and strong constraints are applied to the use of new defensive measures. He cites the evolution of the Corporate Value Study Group, and its position on the primacy of shareholder interests, and argues that a strong lever for change has been wish to avoid charges of being heisateki (clannishly exclusive) from the foreign investment community and its Japanese allies. He concludes that, despite some management mutterings, Japan's conversion to shareholder capitalism may be unstoppable.Less
In this chapter, Ronald Dore contrasts the rhetoric about the Japanese corporation's duties to multiple stakeholders, and the absence of proposals to modify the extent to which the law makes shareholders the sole sovereign controller of the fate of companies. Under the “new orthodoxy” it has become difficult to publicly defend practices such as reciprocal shareholding, which shielded companies from hostile takeovers in the past, and strong constraints are applied to the use of new defensive measures. He cites the evolution of the Corporate Value Study Group, and its position on the primacy of shareholder interests, and argues that a strong lever for change has been wish to avoid charges of being heisateki (clannishly exclusive) from the foreign investment community and its Japanese allies. He concludes that, despite some management mutterings, Japan's conversion to shareholder capitalism may be unstoppable.
Simon Learmount
- Published in print:
- 2004
- Published Online:
- September 2007
- ISBN:
- 9780199269082
- eISBN:
- 9780191719257
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199269082.003.0005
- Subject:
- Business and Management, Corporate Governance and Accountability
This chapter present an analysis of the interaction between the Japanese companies studied and their shareholders. It is generally claimed that Japanese shareholders have the ability to monitor ...
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This chapter present an analysis of the interaction between the Japanese companies studied and their shareholders. It is generally claimed that Japanese shareholders have the ability to monitor managers and hold them accountable circumscribed. However, the growth of foreign holdings of Japanese equities and the poor economic performance of the Japanese economy during the 1990s are contributing to the collapse of the traditional system of stable shareholdings, and bringing about a reassertion of shareholder rights. It is argued that Japanese managers are not held accountable by shareholders, nor do they feel particularly accountable to them. This does not seem to be changing despite the introduction of many new practices, which are affecting the way that shareholders relate to companies in Japan.Less
This chapter present an analysis of the interaction between the Japanese companies studied and their shareholders. It is generally claimed that Japanese shareholders have the ability to monitor managers and hold them accountable circumscribed. However, the growth of foreign holdings of Japanese equities and the poor economic performance of the Japanese economy during the 1990s are contributing to the collapse of the traditional system of stable shareholdings, and bringing about a reassertion of shareholder rights. It is argued that Japanese managers are not held accountable by shareholders, nor do they feel particularly accountable to them. This does not seem to be changing despite the introduction of many new practices, which are affecting the way that shareholders relate to companies in Japan.
