Under certain circumstance, a relaxation in occupational licensing standards can increase the quality of those who enter the industry. The effect turns on the opportunity costs of preparing for the licensing examination: making the test easier can increase the quality of those passing if it...

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...

The tax office wins most cases in Japan. We think about why this might be. We find that although judges who rule in favor of the taxpayer do not suffer in their future careers, if the loser - whether governemnt or taxpayer - appeals and wins, the reversed judge's career does take a turn for the...

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...

According to modern contract theory, how firms structure their trading patterns and governance structures will depend both on the size of any relationship-specific investments they make, and on the feasibility of detailed contracts. Suppose contracts are hard to draft and enforce, but firm A...

Observers routinely claim that the Japanese government of the high-growth 1960s and 1970s rationed and ultimately directed credit. It barred domestic competitors to banks, insulated the domestic capital market from international competitive pressure, and capped loan interest rates. In the...

The tax office wins most cases in Japan. We think about why this might be. We find that although judges who rule in favor of the taxpayer do not suffer in their future careers, if the loser-- whether governemnt or taxpayer--appeals and wins, the reversed judge's career does take a turn for the...

Conviction rates in Japan exceed 99 percent -- why? On the one hand, because Japanese prosecutors are badly understaffed they may prosecute only their strongest cases and present judges only with the most obviously guilty defendants. On the other, because Japanese judges can be reassigned by the...