In 1985, Demsetz & 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 patterns...

Observers of the formerly communist transitional economies urge firms there to obtain funds from a relatively few sources. They note the institutional problems the firms face: courts not working, markets not developed, statutes not written. Because these firms cannot rely on the courts to...

Observers of modern transitional economies urge firms there to ignore stock markets. Stock markets simply will not work in such environments, they explain. Firms should instead rely on debt finance, particularly bank debt. Only then will they be able to keep principal-agent (i.e.,...

Although some observers urge modern transitional economies to rely on bank finance rather than stock markets, in quot;transitionalquot; Japan at the opening of the 20th century large firms did not rely on debt. Instead, they raised their funds through the stock market, and took a variety of...

<DIV>For Western economists and journalists, the most distinctive facet of the post-war Japanese business world has been the <I>keiretsu,</I> or the insular business alliances among powerful corporations. Within <I>keiretsu</I> groups, argue these observers, firms preferentially trade, lend money, take and receive...</i></i></div>

Although reformers often claim Japanese firms appoint inefficiently few outside directors, the logic of market competition suggests otherwise. Given the competitive product, service, and capital markets in Japan, the firms that survive should disproportionately be firms that tend to appoint...

In 1985, Demsetz and 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, any regression of profitability on ownership patterns would yield...

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...

"Firms in modern developed economies borrow from both banks and trade partners. Using Japanese manufacturing data from the 1960s, we estimate the price of trade credit, and explore some of the ways firms choose between the credit and bank loans. We find that firms of all sizes borrow heavily...

Central to so many accounts of post-war Japan, the keiretsu corporate groups lacked economic substance from the start. Conceived by Marxists committed to locating "domination" by "monopoly capital," they found an early audience among western scholars searching for evidence of culture-specific...