Showing papers on "Corporate group published in 2009"

Third-World Copycats to Emerging Multinationals: Institutional Changes and Organizational Transformation in the Indian Pharmaceutical Industry

Abstract: This article investigates how Indian pharmaceutical firms, facing discontinuous institutional changes in their domestic environment due to economic liberalization and intellectual property reforms, have undertaken organizational transformation. Internationalization of resources and product markets constitutes an important component of organizational transformation for local firms in emerging economies. Using longitudinal data on 206 Indian pharmaceutical firms from 1995--2004, we find that firms' access to international technological and financial resources enables product market internationalization. Furthermore, we theorize and find support for our predictions that the association between international resources and markets is conditioned by time and business group affiliation, and product market internationalization affects financial performance. Several implications thus emerge for theory and practice associated with the sources of competitiveness in emerging economy firms and their transformation into globally competitive multinational firms.

International Diversification, Business Group Affiliation and Firm Performance: Empirical Evidence from India*

Abstract: We investigate the impact of business group affiliation on the relationship between international diversification and firm performance for emerging economy firms. We develop the theoretical arguments based on an integration of the literature on international diversification with the institutional theory perspective. We argue for a U-shaped relationship between international diversification and firm performance, and suggest that a firm's affiliation to a business group moderates the relationship between international diversification and firm performance. Based on a sample of Indian firms, we find that firm performance is positively related to the degree of internationalization, while business group affiliation reduces the positive effect of internationalization on firm performance.

Business Group Affiliation, Firm Governance, and Firm Performance: Evidence from China and India

Abstract: Manuscript Type: Empirical Research Question/Issue: This study seeks to understand how business group affiliation, within firm governance and external governance environment affect firm performance in emerging economies. We examine two aspects of within firm governance – ownership concentration and board independence. Research Findings/Insights: Using archival data on the top 500 Indian and Chinese firms from multiple data sources for 2007, we found that group affiliated firms performed worse than unaffiliated firms, and the negative relationship was stronger in the case of Indian firms than for Chinese firms. We also found that ownership concentration had a positive effect on firm performance, while board independence had a negative effect on firm performance. Further, we found that group affiliation – firm performance relationship in a given country context was moderated by ownership concentration. Theoretical/Academic Implications: This study utilizes an integration of agency theory with an institutional perspective, providing a more comprehensive framework to analyze the CG problems, particularly in the emerging economy firms. Empirically, our findings support, as well as contradict, some of the conventional wisdom, and suggest useful avenues for future research. Practitioner/Policy Implications: This study shows that reforms in general and CG reforms in particular are effective in emerging economies, which is an encouraging sign for policy makers. However, our research also suggests that it may be time for India and China to stop the encouragement for the empire building through group formation in the corporate world. For practioners, our findings suggest that firms need to balance the need for oversight with the need for advice, while selecting independent directors.

Stages of Capital: Law, Culture, and Market Governance in Late Colonial India

Abstract: In Stages of Capital , Ritu Birla brings research on nonwestern capitalisms into conversation with postcolonial studies to illuminate the historical roots of India’s market society. Between 1870 and 1930, the British regime in India implemented a barrage of commercial and contract laws directed at the “free” circulation of capital, including measures regulating companies, income tax, charitable gifting, and pension funds, and procedures distinguishing gambling from speculation and futures trading. Birla argues that this understudied legal infrastructure institutionalized a new object of sovereign management, the market, and along with it, a colonial concept of the public. In jurisprudence, case law, and statutes, colonial market governance enforced an abstract vision of modern society as a public of exchanging, contracting actors free from the anachronistic constraints of indigenous culture. Birla reveals how the categories of public and private infiltrated colonial commercial law, establishing distinct worlds for economic and cultural practice. This bifurcation was especially apparent in legal dilemmas concerning indigenous or “vernacular” capitalists, crucial engines of credit and production that operated through networks of extended kinship. Focusing on the story of the Marwaris, a powerful business group renowned as a key sector of India’s capitalist class, Birla demonstrates how colonial law governed vernacular capitalists as rarefied cultural actors, so rendering them illegitimate as economic agents. Birla’s innovative attention to the negotiations between vernacular and colonial systems of valuation illustrates how kinship-based commercial groups asserted their legitimacy by challenging and inhabiting the public/private mapping. Highlighting the cultural politics of market governance, Stages of Capital is an unprecedented history of colonial commercial law, its legal fictions, and the formation of the modern economic subject in India.

Japanese keiretsu : Past, present, future

Abstract: This article reviews major theoretical and empirical work on vertical and horizontal Japanese keiretsu. We first outline the history, characteristics, and strategic and performance implications of each type of business group. We then discuss changes in the Japanese economy during the post-1992 Japanese economic decline and their implications for the persistence and continued benefits of each form of inter-corporate grouping followed by a discussion of empirical findings regarding the continued role of keiretsu in the Japanese economy. The review concludes by exploring areas of future research into the evolution of keiretsu ties and their implications.

Reflections on corporate reputations

Abstract: Purpose – The purpose of this paper is to illustrate the importance of corporate reputation to the management of contemporary organisations.Design/methodology/approach – The approach takes the form of survey research and case studies. The paper is informed by corporate image and reputation research undertaken for major international corporations, governments and NGOs in the UK and in countries throughout the world dating back to the late 1960s.Findings – The paper finds that corporate image is an important factor in the success or failure of virtually all major organisations; corporate reputation is the synthesis of many factors: the brand(s) image, the products (and/or services) class image(s), the brand user(s) image, the image of the country of perceived ownership of a corporation, and the corporate culture/personality; corporate reputations can be measured, and changes in corporate reputations can be tracked; and corporate responsibility is replacing corporate social responsibility as an increasingly ...

The Performance of Group‐affiliated Firms during Institutional Transition: A Longitudinal Study of Indian Firms

Abstract: Manuscript Type: Empirical Research Question/Issue: Institutional and transaction cost theories highlight the idea that group-affiliated firms outperform unaffiliated firms in emerging economies. However, the persistence of superior performance among group-affiliated firms could be challenged by the recent, quick development of markets and institutions in these countries. This article explores the link between firm performance and the evolution of the institutional environment. Research Findings/Insights: We analyze how business group affiliation affected firm performance in India in the post-reform era, i.e., from 1990 to 2006. Our findings show that: (1) the performance benefits of group affiliation are evident in the early phase of institutional transition, but level out in the late phase; (2) older group-affiliated firms are better able to cope with institutional transition than younger group-affiliated firms; and (3) group-affiliated service firms are better able to cope with institutional transition than group-affiliated manufacturing firms. Theoretical/Academic Implications: Our findings support institutional and transaction cost theories, as they show that: (1) when labor, capital, and products markets are characterized by large imperfections and weak supporting institutions business groups outperform independent companies; (2) when markets become more efficient and institutions grow stronger group-affiliated firms fail to show continued superior performance; and (3) heterogeneity among member firms may influence the appropriation of the benefits arising from group affiliation. These findings expand the traditional understanding of the relationship between firm performance and the institutional context in emerging economies, and provide further support for the idea that the relative performance of group-affiliated firms is contingent upon the characteristics of the institutional context and their particular features. Practitioner/Policy Implications: The article has implications for managers and policy makers. Managers of business groups should adapt the timing of strategies to the evolution of the institutional environment. Policy makers should focus on the consequences of their policies, as they may undermine the efficiency of large national companies.

The Amorality of Profit: Transnational Corporations and Human Rights

Abstract: Over the past decade, new revelations about corporate involvement in the Holocaust have sharpened our understanding of the extent to which even businesses that remained neutral towards Nazi Germany were able to profit from the Holocaust. One ethical evaluation of such conduct views that behavior as business as usual. Litigation against those corporations, however, has demonstrated that the law takes a different approach. Morally defensible or not, if corporations are complicit in human rights violations, the victims of the abuses have a legal right to compensation from those corporations. Today, the abuses of the Holocaust are contributing to the development of new approaches to human rights accountability and to the line between the legally acceptable pursuit of profit and criminal or tortious behavior. Although corporate accountability for human rights abuses has received much attention over the past few years from governments, human rights organizations, business groups, and the United Nations, little has been written about the relationship between corporate human rights norms and the legal structure of business organizations. My first goal in this essay is to strengthen the foundation of corporate human rights regulation by situating it within the extensive literature on the nature of the corporate entity and government power to impose limits on that entity.My second goal is to propose an assertive approach to interpreting corporate human rights responsibilities. Both domestic governments and international organizations have danced around this topic, urging voluntary codes of conduct rather than seeking to impose binding rules of law. Such circumspection is unfounded. Corporations are already bound by many core human rights norms. So-called voluntary codes that ask business entities to refrain from committing genocide or to avoid profiting from slave labor are weak concessions to the enormous economic and political power of multinational corporations. Core human rights norms apply to corporations as well as to states and individuals. Enforcement of these norms, however, remains “the Achilles’ heel” of the system, as it does generally in the human rights arena. International norms enforced through international mechanisms or coordinated domestic approaches are essential to the effective regulation of corporate human rights abuses.

The Performance Effects of Business Groups in Russia

Abstract: This study analyses the impact of business group affiliation on firm performance during a time when business groups are newly formed, when the economic and institutional environment is changing, and when group survival is uncertain. Based primarily on a transaction cost approach, we develop two hypotheses, concerning profitability and risk sharing (redistribution) respectively. The positive profitability hypothesis proposes that company affiliation with a business group directly and positively affects the profitability of each affiliate. A positive direct effect emerges when each affiliate benefits from access to group resources. The redistribution hypothesis considers the simultaneous possibility that inter-affiliate transfers of resources through internal markets are designed to redistribute profits among group members. We argue that variance-reducing redistribution from strong to weak group members is linked to group survival in times of institutional change. Our empirical approach focuses on testing these two linked hypotheses (and their alternatives) using a relatively large, contemporary and time varying database of Russian firms. We also develop a framework that distinguishes among the four possible empirical outcomes associated with the hypotheses. Our results provide unambiguous support for the case where the impact of group membership on profitability is positive and redistribution is variance-reducing. We term this outcome Business Group Robustness, and contrast it with other possible empirical outcomes.

Propping and tunneling: Empirical evidence from Japanese keiretsu.

Abstract: We examine the response of horizontal and vertical keiretsu to the changing economic and regulatory climate in Japan from 1987 to 2001. We find evidence of profit tunneling of more weakly affiliated keiretsu firms during strong economic times. We observe propping of weakly aligned firms during recession. Many horizontal keiretsu firms strengthened their degree of adhesion to the horizontal keiretsu in response to increasingly tightened credit conditions post-1991. The motivation behind strengthened affiliation appears primarily linked to the goal of overcoming financial constraints by accessing the internal capital market of the business group.

Business Group Performance in China: Ownership and Temporal Considerations

Abstract: We address the institutional voids hypothesis, which suggests affiliation with a business group will improve a firm's performance in circumstances of poor-quality institutions and extensive market failures. We hypothesize that initial positive effects of group affiliation should decline as the quality of market institutions improves. Further, we hypothesize that differences in state and private ownership will influence the value and persistence of firm affiliation. Using data on 476 publicly listed firms in 1999 and 467 matched firms in 2004, we find support for a temporal hypothesis that affiliation with a business group improves performance, but the value of group affiliation declines over time. We also find support for a state ‘helping hand’ hypothesis that suggests firms with high levels of state ownership initially experienced an amplified value effect from their group affiliation, which disappeared by 2004. The results suggest that China's policy makers are beginning to establish an institutional and market infrastructure that is conducive to entry by unaffiliated, freestanding firms.

Corporate taxation and corporate governance

Abstract: The effects of corporate taxation on firm behavior have been extensively discussed in the neoclassical model of firm behavior which abstracts from agency problems. As emphasized by the corporate governance literature, corporate investment behavior is however crucially influenced by diverging interests between shareholders and managers. We set up an agency model and analyze the crucial issue in corporate taxation of whether the normal return on investment should be exempted from taxation. The findings suggest that the divergence of interests may be intensified and welfare reduced if the corporate tax system exempts the normal return on investment from taxation. The optimal system may well use the full return on investment as a tax base. Hence, tax systems such as an Allowance for Corporate Equity (ACE) or a Cash-flow tax do not have the familiar efficiency-enhancing effects in the presence of corporate agency problems.

Strategy Meets Institutions: The Transformation of Management-Labor Relations at Deutsche Telekom and NTT

Abstract: This comparison of labor-management relations at Deutsche Telekom (DT) and NTT Group (formerly Nippon Telephone and Telegraph) demonstrates the value of considering both institutions and strategic decision-making to understand the interaction between companies and unions. As corporations diversify, multi-divisional or holding company structures emerge, but the degree of diversity introduced in employment relations within the corporate group depends on the interaction between corporate strategy and the strategy of organized labor. The authors’ field research, based on interviews with managers and labor leaders, shows that despite a broadly similar corporate strategy of diversification by DT and NTT after the liberalization of telecommunication markets, employment relations became more decentralized—both for unions and for works councils—within the DT group than within the NTT group. This difference in outcomes is explained by the relative power and strategic choices of labor and management, rather than by constraints and opportunities specific to the existing national institutions.

Business Group Affiliation and Firm Search Behaviour in India: Responsiveness and Focus of Attention

Abstract: This paper investigates the effects of organizational form on problemistic search. We contrast how Indian firms affiliated to business groups and unaffiliated firms evaluate performance and react by adjusting their internal technology search and external market search. We propose that, compared with unaffiliated firms, business group firms are more externally oriented in setting aspiration levels and more likely to respond to low performance in the market domain. We find support for an external orientation of business group affiliated firms and find that group affiliation determines the responsiveness to performance feedback in different search domains. The findings suggest a need to add considerations of organizational form and governance to the theory of organizational search.

European Comparative Company Law

Abstract: 1. The emerging discipline of European company law 2. EC company law and comparative company law: some methodological problems 3. Formation of companies (also including the free movement, Centros type problems) 4. Forms of business organisation 5. Management and control 6. Share and loan capital 7. Protection of minority rights 8. Employee participation 9. Groups of companies 10. Mergers, divisions, acquisitions and take-overs, and their cross-border aspects 11. Investor protection and the regulation of insider trading 12. Corporate insolvency.

Organization and Development of Russian Business: A Firm-Level Analysis

Abstract: Preface INTRODUCTION Emergence of Russian Corporations: from the Soviet Enterprise to a Market Firm PART I: OWNERSHIP, INTERNAL CONTROL, AND MANAGEMENT SYSTEM Stock Ownership and Corporate Control Legal Form of Incorporation Structure of Corporate Boards Impacts of Corporate Governance and Firm Performance on Managerial Turnover Managerial Teams and Firm Restructuring PART II: BUSINESS INTEGRATION AND ITS IMPACT ON CORPORATE GOVERNANCE Organizational Patterns of Corporate Control and Business Integration Corporate Governance and Decision-Making in Business Groups Impact of Business Integration on Corporate Restructuring and Performance PART III: THE ROLE OF EXTERNAL ACTORS IN CORPORATE GOVERNANCE The Banking Sector and Corporate Finance Business Associations: Incentives and Benefits from the Viewpoint Of Corporate Governance State-Business Relationship and Improvement of Corporate Governance CONCLUSIONS Appendix: Outline of the Joint Enterprise Survey

The origins of business groups in China: An empirical testing of the three paths and the three theories

Abstract: The available empirical literature tends to focus on the performance comparison between business groups (BGs) and non-business groups, and there is no study that quantitatively verifies the origins of the business groups, particularly in China. This paper uses the survey data of SOEs (state-owned enterprises) in China to verify the three paths toward business groups, such as M&As (merger and acquisitions), spin-offs and joint ventures. This study discusses three alternative theories to explain the emergence of the business groups in China. These are the market-based view, the state-activism view and the resource-based view. This paper found that the greater autonomy given after changing into a shareholding corporation is one of the most consistent and significant factors leading to the business group, regardless of the paths. First, this implies that SOEs have gone from traditional SOEs, to shareholding corporations, and then finally to business groups. Second, it finds that there are certain differences ...

The Impact of Business Group Affiliation on Performance: Evidence from China’s ‘National Champions’

Abstract: An important aspect of China’s economic reforms has been an ambitious policy to develop a 100 or so large, internationally competitive business groups. Very little is known about these national champion groups or the benefits to subsidiary firms of belonging to them. This study, building from insights and methods used in existing literature, examines the performance of subsidiaries affiliated to China’s national champion groups. Our results find that they perform comparatively well. We discuss possible reasons for this finding and comment more generally on the important role that business groups now play in China’s reform and development.

Whether and How: Effects of International Joint Ventures on Local Innovation in an Emerging Economy

Abstract: Business groups in emerging economies frequently use international joint ventures (IJV) as a channel for knowledge acquisition and technology advancement. While IJVs provide a business group with access to new technology, how successful a group is in exploiting that new knowledge for innovative purposes depends on the groups’ ability to recombine new knowledge with its existing pool of knowledge and resources. The more resources a group spends in forming IJVs with foreign partners, the less resources the group has in developing and sustaining organizational mechanisms that facilitate integration of existing ideas and resources. Following this theoretical duality, we view the IJV – innovation relationship not as an “either – or” question, but as a question of whether and how. Specifically, viewing business groups as networks of loosely coupled firms,we examine howintra-group network structure and evolving institutional environment moderates the IJV – patenting relationship in Taiwan between 1981 and 1998.

Tax Motivated Income Shifting and Korean Business Groups (Chaebol)

Abstract: This paper examines tax-induced income shifting behavior among affiliated firms in Korean business groups (chaebols). Korean corporate income tax law does not require consolidated tax returns, and business groups with a large number of affiliated member firms have incentives to shift income across member firms to reduce the overall taxes of the group. For a large number of Korean companies that are subject to external audits, we perform univariate and multivariate regression analyses on the income shifting behavior of chaebol firms compared with non-chaebol control firms. Our evidence suggests that tax-motivated income shifting activities exist among chaebol firms, and that the extent of income shifting is found to depend on its effect on non-tax cost factors such as the earnings, leverage, and cash flow rights of the controlling shareholders. We also find that income shifting is more pronounced in chaebol firms where the control-cash flow divergence is relatively large, suggesting that income shifting is affected by the controlling shareholders' opportunism. Our study provides some insights on the intra-group income shifting activities where research is limited.

Piercing the veil on corporate groups in Australia: The case for reform

Abstract: Many large-scale businesses are conducted through the form of corporate groups, each company being a separate legal entity enjoying limited liability. This can create problems for those dealing with corporate group companies. This article makes two points: first, with reference to the theoretical literature on limited liability and veil-piercing, that the corporate veil should be pierced to impose liability on parent companies for conduct involving a lack of care and diligence or a lack of good faith in the dealings of their subsidiaries; and secondly, that the piercing should be done via statute, in effect codifying the liability of a parent company as a shadow director. It is argued that this would overcome the vagueness of the present veil-piercing doctrine in Australia and send a message to parent companies that they cannot shield themselves behind the veil of incorporation to deny recovery to those affected by their decisions and their conduct.

The Modern Law of Corporate Groups: An Empirical Study of Piercing the Corporate Veil in the Parent-Subsidiary Context

Abstract: Today, massive corporations – both national and international – dominate financial and commercial activities, exercising enormous economic power. The standard organizational structure for these businesses has a parent corporation as the sole shareholder of multiple, separately incorporated operating subsidiaries (or layers of subsidiaries) in a corporate group. One particular application of the law of corporate groups entails dealing with the ramifications of subsidiary insolvency. Given the massive financial assets of many multinational parent corporations, actions to ignore the legal separateness of a corporate subsidiary of a parent company offer some of the biggest potential payoffs for claimants. In today's global economic world, the primary impact of piercing theory and application comes in the context of these corporate groups. Empirical analysis treating the application of substantive piercing doctrine to the parent-subsidiary context is virtually nonexistent. This Article begins to fill that void. The underlying project is an empirical analysis of piercing the corporate veil in the parent-subsidiary context. The Article's first objective is to describe statistically the propensities of modern courts for piercing the corporate veil in the parent-subsidiary situation. Its second objective is to use advanced statistical techniques to explore potential causal relationships regarding piercing the veil in the parent-subsidiary context. Both of these objectives are unique to this study. The hope is that courts, commentators, and practitioners may be better equipped to understand and predict under what circumstances a court is likely to exercise its equitable discretion and hold a parent company liable. Some of the empirical results of this study, even on a descriptive level, are startling. Among the statistically significant findings are: * Courts seldom pierce the subsidiary's corporate veil and do so much less often than in the overall universe of piercing cases, including the classic case of a small business with one or a few individual owners. * Appellate courts pierce approximately twice as often as trial courts. * Entity plaintiffs are more than twice as likely as individual plaintiffs to successfully pierce the subsidiary's veil. * Courts are three times more likely to pierce in a contract case than in a tort case.

The meaning of Nandigram: Corporate land invasion, people's power, and the Left in India

Abstract: T his article discusses the events at Nandigram in West Bengal where in 2006-7, a Left Front government collaborated with an Indonesian corporate group to forcibly acquire land from local peasants and construct a Special Economic Zone. The events are placed against the broad processes of accumulation by dis- possession through which peasants are losing their land and corporate profits are given priority over food production. The article looks at the working and impli- cations of the policies and the way in which a Communist Party-led government had become complicit with such processes over the last decade. It critically exam- ines the logic that the government offered for the policies: that of the unavoidable necessity of industrialization, demonstrating that industrialization could have been done without fresh and massive land loss and that industries of the new sort do not generate employment or offset the consequences of large scale displacements of peasants. The article's central focus is on the peasant resistance in the face of the brutalities of the party cadres and the police. We explore the meaning of the vic- tory of the peasants at Nandigram against the combined forces of state and cor- porate power, especially in the context of the present neo-liberal conjuncture.

Voluntary Corporate Governance Disclosure: A Study of Selected Companies in India

Abstract: (ProQuest: ... denotes formulae omitted.)IntroductionThe concept of corporate governance has emerged as a result of shifting of objective of the corporates from profit maximization to value maximization through transparent, fair, efficient and effective policies of the organization. After the failure of corporate giants like Enron, World Com, Xerox, etc., this concept has assumed a great importance. Recent financial crisis in the US economy in September 2008, led to the failure of big corporate giants, like Lehman Brothers Ltd. and AIG Insurance Ltd. So the failure of these corporates has made it more essential to realize the importance of corporate governance. Corporate governance is basically concerned with the direction and control of the company. It deals with the issues and problems arising from the separation of ownership and control (Figure 1). The following definitions clearly state the meaning of corporate governance.The most prominent definition is given by Cadbury Committee in its report. The committee was set up by the London Stock Exchange under the chairmanship of Sir Adrian Cadbury in May 1991 to recommend the improvement of the system of internal financial controls. Cadbury Committee Report, which was published in 1992, defines corporate governance as "the system by which the companies are directed and controlled".Organization for Economic Cooperation and Development (OECD) defines corporate governance as "the system by which the business corporations are directed and controlled. The corporate governance structure defines the distribution of rights and responsibilities among different participants of the organization such as the board, managers, shareholders and other stakeholders and spells out the rules and procedures for making decisions on corporate affairs. By doing this, it also provides the structure through which the organization's objectives are set and become means of attaining those objectives and monitoring performance".A deep insight into the above definitions brings out the idea that corporate governance is a mechanism adopted by the companies to ensure integrity and ability of the board and management in taking strategic decisions as well as managing the affairs of the corporation.In India, Confederation of Indian Industry (CII), a leading association of business entities, introduced the voluntary corporate governance code in the year 1998. After this, the Indian financial market regulator, Securities Exchange Board of India (SEBI), set up corporate governance committee under the chairmanship of Kumaramangalam Birla, the chairman of A V Birla Group in 1999. Based on the recommendations of the committee, SEBI introduced mandatory corporate governance code in place of voluntary one in the year 2000 through Clause 49 of the listing agreement. This Clause is made applicable to all the companies listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and other stock exchanges. These regulations require the firms not only to follow corporate governance regulation but also to disclose them without affecting their competitiveness. But the Indian firms, with the need to access the capital at lower cost disclose more than what is mandatory. In this paper, the authors present the voluntary corporate governance disclosure practices of Indian firms.The paper first deals with the review of relevant literature, and database and methodology. Then it discusses companywise voluntary corporate governance disclosure followed, to move on to itemwise voluntary corporate governance disclosure practices of the companies.Review of LiteratureGupta et al. (2003) analyzed the corporate governance reporting practices of 30 selected Indian companies listed on BSE. Corporate governance section of the annual reports for the years 2001-02 and 2002-03 had been analyzed by using the content analysis. The researcher had used the disclosure score as dependent variable and size of the company in terms of total assets, number of independent directors and listing status as independent variables. …

The Essential Elements of Corporate Law

Abstract: This article is the first chapter of the second edition of The Anatomy of Corporate Law: A Comparative and Functional Approach, by Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry Hansmann, Gerard Hertig, Klaus Hopt, Hideki Kanda and Edward Rock (Oxford University Press, 2009). The book as a whole provides a functional analysis of corporate (or company) law in Europe, the U.S., and Japan. Its organization reflects the structure of corporate law across all jurisdictions, while individual chapters explore the diversity of jurisdictional approaches to the common problems of corporate law. In its second edition, the book has been significantly revised and expanded. As the book's introductory chapter, this article describes the functions and boundaries of corporate law. We first detail the economic importance of the corporate form's hallmark features: legal personality, limited liability, transferable shares, delegated management, and investor ownership. We then identify the major agency problems that attend the corporate form, and that, therefore, corporate law must address: conflicts between managers and shareholders, between controlling and minority shareholders, and between shareholders as a class and non-shareholder constituencies of the firm such as creditors and employees. In our view, corporate law serves in part to accommodate contract and property law to the corporate form and, in substantial part, to address the agency problems that are associated with this form. We next consider the role of law in structuring corporate affairs so as to achieve these goals: whether, and to what extent standard forms - as opposed, on the one hand, to private contract, and on the other, to mandatory rules - are needed, and the role of regulatory competition. Whilst the ‘core’ features of corporate law are present in all - or almost all - legal systems, different systems have made different choices regarding the form and content of many other aspects of their corporate laws. To assist in explaining these, we review a range of forces that shape the development of corporate law, including domestic share ownership patterns. These forces operate differently across countries, implying that in some cases, complementary differences in corporate laws are functional. However, other such differences may be better explained as a response to purely distributional concerns. In addition to Chapter 1, Chapter 2 of the Anatomy of Corporate Law (2nd ed.), Agency problems, Legal Strategies, and Enforcement is also available (full text) on SSRN at http://ssrn.com/abstract=1436555.

A majority of states have now adopted a key corporate tax reform — "combined reporting"

Abstract: Most large multistate corporations are composed of a “parent” corporation and a number of “subsidiary” corporations owned by the parent. Combined reporting essentially treats the parent and most subsidiaries as one corporation for state income tax purposes. Their nationwide profits are combined — that is, added together — and the state then taxes a share of that combined income. The share is calculated by a formula that takes into account the corporate group’s level of activity in the state as compared to its activity in other states.

A Comparative Analysis of Corporate Governance Systems in Latin America: Argentina, Brazil, Chile, Colombia, and Venezuela

Abstract: This paper describes corporate governance systems in five Latin American countries: Argentina, Brazil, Chile, Colombia and Venezuela. We account for the broader institutional environment by explaining changes over time as well as existing corporate governance systems. We use a stakeholder definition of corporate governance that includes examining insiders such as owners and boards of directors as well as outsiders such as employees. This corporate governance perspective

"Strategic Alliances in the Japanese Economy: Types, Critiques, Embeddedness, and Change"

Abstract: This chapter reviews the role and consequences of strategic alliances in Japanese business. We are not aware of other research published in English that takes a similarly broad look at Japanese firms’ embrace and utilization of strategic alliances. Some readers may take issue with this claim, pointing out that in fact an extensive literature addresses the cooperative customer-supplier relationships that are seen as an integral feature of Japan’s ‘lean production’ model of manufacturing success (Dyer, 1996; Helper et al., 2000; Liker and Choi, 2004). From our perspective, however, those vertical partnerships housed within the durable governance structures known as keiretsu are not strategic alliances in the usual sense of the term. Admittedly, alliances such as the keiretsu that form and persist for other reasons may at times take on strategic purpose. The bulk of our work here addresses the changing interplay between Japan’s keiretsu networks and the strategic-alliance creation process in its domestic economy. Japan, of course, has been a major player in international strategic alliances, and we review the literature on those alliance patterns and how they have changed over time. However, the broad involvement of Japanese firms in alliances with foreign partners appears to have coincided with relatively little strategic-alliance activity at home, especially if we exclude government-led research consortia and the keiretsu themselves.