Papers in this volume focus on corporate governance broadly defined as the system of control that helps corporations effectively manage, administer, and direct economic resources. Questions of what and how to produce become equally important as organizations strive to better serve demanding customers. As a result, the design and control of effective organizations have become an integral part of financial economics. Traditionally, organization structure has been described by the vertical and horizontal relationships among the firm, its customers and suppliers. More recently, researchers have come to understand that the efficiency of firms depends upon the ability of participants to find effective means to minimize the transaction costs of coordinating productive activity. As financial economists have learned, resource allocation will be efficient so long as transaction costs remain low and property rights can be freely assigned and exchanged. An important problem that must be addressed is the so-called agency problem resulting from the natural conflict between owners and managers.Agency costs are the explicit and implicit transaction costs necessary to overcome the natural divergence of interest between agent managers and principal stockholders. The value-maximizing organization design minimizes unproductive conflict within the firm. Papers in this volume show how corporate control mechanisms inside and outside the firm have evolved around the world to allocate decision authority to that person or organization best able to perform a given task.
Mark Hirschey is the Anderson Chandler Professors of Business at the University of Kansas. Kose John is the Charles William Gerstenberg Professor of Banking and Finance at New York University. Professor Makhija is chair of Fisher Colleges department of finance, and holds the Rismiller Endowed Professorship in Finance. His research and teaching interests are in the field of corporate finance, and focus on issues relating to capital structure, corporate governance, and investment policy. His work appears in such top professional journals as the Journal of Finance and the Journal of Financial Economics. His recent published research examines the role of banks in mergers & acquisitions, corporate governance in privatization in Eastern Europe, corporate diversification and financing decisions by public utilities, as well as economic value added as a performance metric. Makhija received a PhD in Finance from the University of Wisconsin-Madison.
Foreign ownership and firm value: Evidence from Japan (K. Park, S.P. Ferris). Corporate governance and firm's value in emerging markets: The case of Jordan (R. Al-Khouri). Reforms in corporate governance in Asia after the financial crisis (H. Cabalu). China's institutional environment and corporate governance (J.J. Chen). Legal issues of enforcement for corporate governance in Vietnam: Constraints and recommendations (B.T. Dan). The impact of regulatory change on insider trading profitability: Some early evidence from New Zealand (A. Gilbert, A. Tourani-Rad, T.P. Wisniewski). Corporate governance mechanisms in action: The case of Air Canada (S.M. Hennessey). Further evidence on institutional ownership and corporate value (W.W. Jennnings). The two dimensions of corporate governance independence (K.S. Rebeiz). Legal features of traded shares (N.R. Sabri).