The Corporate Monitoring Firm
20 Pages Posted: 19 May 1997
Date Written: January 1999
Shareholders can gain effective control over their firm's management by voting to choose an outside agency to nominate director candidates. This would give the board and management a greater incentive to serve the owners' interests, resulting in higher productivity of capital, more realistic levels of executive pay, less short-termism, and a moderation of the corporate bloat that tends to necessitate drastic cuts. Such a system would further improve corporate governance in western countries, and provide a much needed "quick fix" for governance problems in Asia.
JEL Classification: G32, G24
Suggested Citation: Suggested Citation