Article: Political preconditions to separating ownership from corporate control.

INTRODUCTION: WHY DO ONLY SOME NATIONS HAVE PUBLIC FIRMS?

The public firm, with dispersed stockholders in deep liquid securities markets, dominates business in the United States. Despite its pervasiveness, the public firm has well-known infirmities, namely in the fragile ties that bind managers to shareholders. If shareholders strongly fear managers' disloyalty or incompetence, they invest warily; if sufficiently fearful, they do not invest at all, and other ownership structures will prevail. But the core problems of binding managers to shareholders in the United States have shrunk to acceptable levels; investors are not so afraid of managers that they refuse to ...

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