Observers of modern transitional economies urge firms there to ignore stock markets. Stock markets simply will not work in such environments, they explain. Firms should instead rely on debt finance, particularly bank debt. Only then will they be able to keep principal-agent (i.e.,...

In 1985, Demsetz & Lehn argued both that the optimal corporate ownership structure was firm-specific, and that market competition would drive firms toward that optimum. Because ownership was endogenous to expected performance, they cautioned, any regression of profitability on ownership patterns...

Observers of the formerly communist transitional economies urge firms there to obtain funds from a relatively few sources. They note the institutional problems the firms face: courts not working, markets not developed, statutes not written. Because these firms cannot rely on the courts to...

Prepared for a forthcoming book on the distribution sector in Japan, this essay introduces the distribution network in the apparel industry. We note the varying patterns of cross-market contracting and intra-firm organization in the industry, and trace the economizing logic involved. More...

The Japanese quot;main bank systemquot; figures prominently in the recent literature on quot;relationship banking.quot; By most accounts, the main bank epitomizes relationship finance: traditionally, every large Japanese firm had one, and that bank monitored the firm, participated in its...

Although some observers urge modern transitional economies to rely on bank finance rather than stock markets, in quot;transitionalquot; Japan at the opening of the 20th century large firms did not rely on debt. Instead, they raised their funds through the stock market, and took a variety of...

Several decades ago, Gerschenkron famously argued that banks facilitate economic growth in quot;backwardquot; countries. To similar effect, theorists sometime claim that banks promote growth by reducing informational asymmetries and thereby improving the allocation of funds. As a fast-growth but...

Reformists argue that Japanese firms maintain inefficiently few outside directors, while theory suggests market competition should drive firms toward their firm - specifically optimal board structure (if any). The debate suggests three testable hypotheses. First, perhaps board composition does...

In 1985, Demsetz amp; Lehn argued both that the optimal corporate ownership structure was firm-specific, and that market competition would drive firms toward that optimum. Because ownership was endogenous to expected performance, they cautioned, any regression of profitability on ownership...

In the 1950s and 60s, Alexander Gerschenkron claimed that banks facilitate economic growth among quot;backwardquot; countries. In 1990s and 2000s, many theorists similarly claim that banks promote growth. Banks do so by their superior monitoring and screening capabilities, they reason. Through...