Harvard Business School

July 20 - 21, 2001
Shanghai, China

Shanghai Research Conference
Corporate Governance: A Functional Approach

CONFERENCE REGISTRATION FORM
Return by July 10

Please provide complete information, and fax this form to Global Initiative at 617.495.9167, or email it to global@hbs.edu. If you have any questions, please email us or call us at 617.495.6923.

ABSTRACTS

The Challenge of Globalization for Systems of Corporate Governance
Dwight B. Crane, Harvard Business School

Economic and political integration has placed real and significant pressure on the systems of corporate governance in use around the world. By focusing on the underlying purposes of corporate governance, a functional perspective provides a useful way to explore changes in the institutional arrangements being used. Financial institutions have traditionally been one of the major players involved in corporate governance functions, particularly in countries where banks have been a dominant source of finance for business firms. However, the internationalization of financial markets, the emergence of the Euro, and growing household investment in equities have combined to increase the role of financial markets relative to that of financial firms. This requires a strengthening of the other institutions involved in corporate governance, including boards of directors, information-oriented activities such as the accounting process, and the legal and regulatory framework operating within countries.

International Competition in Labor and Product Markets and the Impact on Corporate Governance
Tarun Khanna, Harvard Business School

In high-tech industries, such as software development, firms from India compete in major developed countries to sell their services and hire their professional workforce. Compensation that includes stock options is a common feature of developed-country compensation packages for software professionals. This research documents the impact that such packages had first on Indian software firms in direct competition. It next demonstrates how this had a ripple effect on Indian firms, influencing basic governance practices, shareholder rights, and employee and executive compensation in a variety of industries that are only tangentially connected to software. International competition in good and factor markets can set off a chain reaction of changes and pressures that moves far outside the industry and marketplace initially affected.

Information Transparency and Disclosure Practices: Behind the Rules
Krishna Palepu, Harvard Business School

Much of the focus on disclosure and transparency has concerned the rules, law, and regulations that promote it. This study focuses on the institutional memory required to achieve meaningful disclosure and transparency. Laws without judges and accounting statements without disinterested auditors provide examples of how important the human skill sets, institutions, and resident knowledge are to achieving meaningful results on this key corporate governance function.

Investor Protection, Theft, and Corporate Governance
Andrei Shleifer, Harvard University

A growing body of evidence indicates that legal rules matter for corporate governance around the world. Countries with stronger investor protection have more developed capital markets and find it easier to finance economic development. Weak corporate governance also appears to make companies and countries vulnerable to large collapses. The origin of corporate governance institutions lies with the history of competing political systems within Europe and colonization outside of Europe. Despite the importance of long-standing historical influences, effective legal reform has proved possible in some cases. Some of the successful reforms to date implement U.S. standards of disclosure.

Governance of New Firms: A Functional Perspective
Josh Lerner, Harvard Business School

This paper seeks to explore the financing of young, high-growth firms from a functional perspective. The paper first highlights the four common problems that can make
the financing and oversight of these companies difficult. It then explores the broad classes of responses employed by corporate investors and venture capitalists to
alleviate these problems. The paper also considers three reasons why the oversight of such firms can prove ineffective. This theoretical discussion is then illustrated
by an examination of three "case studies": the financing of entrepreneurial firms by venture capitalists in the United States, the structuring of strategic alliances
between large and small firms, and the evolving structure of Asian private equity transactions.