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What is corporate governance?
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Key topics
 The big picture
 Stock price formation
 Fundamental value analysis
International corp. governance

Incentive mechanisms
 Decision system
Performance monitoring
 Incentive based compensation
 Bankruptcy system
 Ownership structure
 Creditor structure
 Capital structure
 Market for corporate control
Labor market competition
Product market competition

Related topics
Transaction cost economics
 Positive economics



Bankruptcy system

Introduction: The bankruptcy system is here defined by the legal procedures that govern the bankruptcy of firms. For instance, those specifying the transfer of corporate control from stockholders to creditors when a firm goes bankrupt. These systems are of importance in corporate governance because their design determines the incentives of managers and thereby the economic efficiency of the firm. For a reference on bankruptcy systems see, for instance, Smith and Warner [1979].


  • Table - Hypotheses: Effects of the bankruptcy system on corporate performance and other other kinds of institutions of relevance for corporate governance.
  • Table - International corporate governance: Tentative characterizations of legal and empirical state of large firm bankruptcy system in various countries as of 1980-95: 1) Developing countries. 2) Germany. 3) Japan. 4) Anglo-American countries. 5) Denmark.


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