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Abstract:
Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the theoretical and empirical research on the main mechanisms of corporate control, discuss the main legal and regulatory institutions in different countries, and examine the comparative corporate governance literature. A fundamental dilemma of corporate governance emerges from this overview: regulation of large shareholder intervention may provide better protection to small shareholders; but such regulations may increase managerial discretion and scope for abuse.

Abstract:
Corporate governance is concerned with the resolution of collective action problems among dispersed investors and the reconciliation of conflicts of interest between various corporate claimholders. In this survey we review the theoretical and empirical research on the main mechanisms of corporate control, discuss the main legal and regulatory institutions in different countries, and examine the comparative corporate governance literature. A fundamental dilemma of corporate governance emerges from this overview: large shareholder intervention needs to be regulated to guarantee better small investor protection; but this may increase managerial discretion and scope for abuse. Alternative methods of limiting abuse have yet to be proven effective.

Corporate governance, ownership, takeovers, block holders, boards

Abstract:
The paper examines the impact of executive compensation on private securities litigation. We find that incentive pay in the form of options increases the probability of securities class action litigation, holding constant a wide range of firm characteristics. We further document that there is abnormal upward earnings manipulation during litigation class periods and that insiders exercise more options and sell more shares during class periods, but that this activity is largely driven by pre-existing option holdings of the managers. Our results suggest that option-based compensation may have the unintended side effect of giving executives an incentive to focus excessively on the short term share price.

securities litigation; executive compensation; executive stock options; earnings management; insider sales

Abstract:
This paper documents the aggregate trends in the foreign listings of companies and analyzes both their distinctive pre-listing characteristics and their post-listing performance relative to other companies. In the 1986-97 interval, many European companies listed abroad, but did so mainly on US exchanges. At the same time, the number of US companies listed in Europe decreased. The cross-listings of European companies appear to have sharply different motivations and consequences depending on whether they cross-list in the United States or within Europe. In the first case, companies pursue a strategy of rapid expansion fuelled by high leverage before the listing and large equity issues after the listing. They rely increasingly on export markets both before and after the listing, and tend to belong to high-tech industries. In the second case, companies do not grow more than the control group, and increase their leverage after the cross-listing. Also, they fail to increase their foreign sales in the wake of the cross-listing. The only common features of the two groups are their large size, high foreign sales before cross-listing and high R&D spending after cross-listing.

Abstract:
This paper analyses ownership and control structures of Dutch listed companies. Legislation effective since 1992 mandates all shareholders with holdings of 5 percent or more in Dutch companies to disclose their holdings. Our analysis shows that the average ownership stakes of the largest and the three largest shareholders are 27% and 41%, respectively. The average ownership stakes of banks, insurance companies and other financial institutions are relatively low. We observe that voting rights are more concentrated than ownership rights the use of a supervisory board representing interests of different stakeholders is ubiquitous; and listed companies use different forms of antitakeover defence measures.

Abstract:
In this paper we examine the effects of the amount of trade disclosure in an experimental financial market, in which nine professional traders set quotes and trade continuously. In addition to these market makers, two computerized external customers interact, representing both informed and liquidity or noise traders. The amount of transaction information is varied, whereas the level of price information is held constant at a low level. From our results it becoms clear that that uninformed traders gain from an increase in the level of transparency. This gain from transparency comes at the cost of the informed traders. In terms of spreads, we find significant wider opening spreads in transparent markets in contrast with opaque markets. The differences in spreadsize dissappear over time in such a way that the spreads in the transparent markets narrow whereas in opaque markets they remain constant. Finally, we find that transparency significantly enhances the price discovery process.

Abstract:
The paper examines the impact of executive compensation on private securities litigation. We find that incentive pay in the form of options increases the probability of securities class action litigation, holding constant a wide range of firm characteristics. We further document that there is abnormal upward earnings manipulation during litigation class periods and that insiders exercise more options and sell more shares during class periods, but that this activity is largely driven by pre-existing option holdings of the managers. Our results suggest that option-based compensation may have the unintended side effect of giving executives an incentive to focus excessively on the short term share price.

G30, G34, J33, K22, M41

Abstract:
This paper documents aggregate trends in the foreign listings of companies, and analyzes their distinctive prelisting characteristics and postlisting performance. In 1986-1997, many European companies listed abroad, mainly on U.S. exchanges, while the number of U.S. companies listed in Europe decreased. European companies that cross-list tend to be large and recently privatized firms, and expand their foreign sales after listing abroad. They differ sharply depending on where they cross-list: The U.S. exchanges attract high-tech and export-oriented companies that expand rapidly without significant leveraging. Companies cross-listing within Europe do not grow unusually fast, and increase their leverage after cross-listing.

Abstract:
This paper summarises the main results of a research project, "Who Controls Corporate Europe?", undertaken by teams of researchers from the various countries investigated, and coordinated by the European Corporate Governance Network in 1996-98. The project relied on a common shareholder voting power disclosure standard adopted by the European Union (comparable to Section 13D-3 of the General Rules and Regulations promulgated under the Securities Exchange Act of 1934 in the United States).

The research found a very high degree of concentration of shareholder voting power in Continental Europe relative to the U.K., and even concentration in the U.K. is still considerably higher than in the United States. The size of voting blocks in listed companies reflects particular features of company law, securities regulation and the need for stock market liquidity in the different European Union Member States. Under current European disclosure legislation, the cash-flow stakes associated with a given degree of voting power do not need to be disclosed. The conclusions stress the need for better European disclosure and the need to study the relationship between large controlling shareholders and weak minority shareholders, as well as the relationship between management and dispersed shareholders.

Abstract:
This paper summarises the main results of a research project, "Who Controls Corporate Europe?", undertaken by teams of researchers from the various countries investigated, and coordinated by the European Corporate Governance Network in 1996-98. The project relied on a common shareholder voting power disclosure standard adopted by the European Union (comparable to Section 13D-3 of the General Rules and Regulations promulgated under the Securities Exchange Act of 1934 in the United States).

The research found a very high degree of concentration of shareholder voting power in Continental Europe relative to the U.K., and even concentration in the U.K. is still considerably higher than in the United States. The size of voting blocks in listed companies reflects particular features of company law, securities regulation and the need for stock market liquidity in the different European Union Member States. Under current European disclosure legislation, the cash-flow stakes associated with a given degree of voting power do not need to be disclosed. The conclusions stress the need for better European disclosure and the need to study the relationship between large controlling shareholders and weak minority shareholders, as well as the relationship between management and dispersed shareholders.