Diane K. Denis

John J. McConnell

University of Washington School of Business Administration

International Corporate Governance


We survey two generations of research on corporate governance systems around the world, concentrating on countries other than the U.S. The first generation of international corporate governance research is patterned after the U.S. research that precedes it. These studies examine individual governance mechanisms - particularly board composition and equity ownership - in individual countries The second generation of international corporate governance research considers the possible impact of differing egal systems on the structure and effectiveness of corporate governance and compare systems across countries.


Jensen and Meckling (1976) apply agency theory to the modern corporation and model the agency costs of outside equity. In doing so, they formalize an idea that dates back at least as far as Adam Smith (1776): when ownership and control of corporations are not fully coincident, there is potential for conflicts of interest between owners and controllers.

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