Abstract We set up a model to study how ownership structure, corporate law and employment law interact to set the incentives that influence the decision by a large shareholder or manager effectively controlling the firm whether to divert resources from minority shareholders and employees. We...

The fundamental problem of corporate governance in the United States is to alleviate the conflict of interest between dispersed small shareowners and powerful controlling managers. The fundamental corporate governance in continental Europe and in most of the rest of the world is different....