Strong Managers, Weak Owners

Mark J. Roe is a professor at Columbia Law School.

"Economic theory appeared to predict that the American version [of capitalism, in which firms feed on a huge and liquid stockmarket] should be the most efficient. This view stemmed from [Berle and Means] in The Modern Corporation and Private Property ... [and] held sway for the next fifty years... Roe ... takes this debate a giant step forward. Far from being the inevitable winner of a Darwinian struggle, argues Roe, the Berle-Means corporation owes its existence to American politics, and in particular to a deeply ingrained popular mistrust of concentrated financial power."--The Economist "Roe ... argues persuasively that old-fashioned politics ... play[s] the key role in building a structure of corporate finance... Strong Managers, Weak Owners does for corporate governance what Alfred Chandler's The Visible Hand did for the corporation: makes history essential to understanding current practice and policy."--Robert Teitelman, Institutional Investor

• PrefaceIntroductionPt. IThe Economic Paradigm1Ch. 1Diffuse Ownership as Natural Economic Evolution3Ch. 2Fragmentation's Costs9Pt. IIThe Political Paradigm19Ch. 3Diffuse Ownership as Political Product21Ch. 4A Political Theory26Pt. IIIThe Historical Evidence51Ch. 5Banks54Ch. 6Insurers60Ch. 7Banks Again94Ch. 8Mutual Funds102Ch. 9Pension Funds124Pt. IVThe Contemporary and Comparative Evidence147Ch. 10Takeovers151Ch. 11Corporate Ownership in Germany and Japan169Ch. 12A Small Comparative Test of the Political Theory187Ch. 13Counterpoint I198Ch. 14Political Evolution in Germany and Japan?210Ch. 15Trends in the United States222Ch. 16An American Crossroads226Pt. VPolicy Recommendations231Ch. 17Managers as the Problem?235Ch. 18Short-Term Finance as the Problem?240Ch. 19Industrial Organization as the Problem?248Ch. 20Counterpoint II254Ch. 21Changing the American Ownership Structure?263Conclusion283Bibliography289Acknowledgments309Index311