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Advances in Financial Economics, volume 18, will present research on corporate governance both in the US and globally. Papers will deal with the role played by boards of directors, internal organization design and governance mechanisms, franchise agreements, the effect of regulation and policy, the market for corporate control, and strategic alliances. The volume will aim at providing a deeper understanding of corporate governance practices, trends, innovations and challenges using international data.

Corporate governance constitutes the internal and external institutions, markets, policies, and processes designed to help companies maximize their efficiency and value. In this collection of classic and current articles from the Journal of Applied Corporate Finance, thought leaders such as Michael Jensen and Robert Monks discuss the corporate mission of value maximization and the accomplishments and limitations of U.S. governance in achieving that end. They address the elements driving corporate value: the board of directors, compensation for CEOs and other employees, incentives and organizational structure, external ownership and control, role of markets, and financial reporting. They evaluate best practice methods, challenges in designing equity plans, the controversy over executive compensation, the values of decentralization, identifying and attracting the "right" investors, the evolution of shareholder activism, creating value through mergers and acquisitions, and the benefits of just saying no to Wall Street's "earnings game." Grounded in solid research and practice, U.S. Corporate Governance is a crucial companion for navigating the world of modern finance.

Ziel des Beitrags ist es, Erkenntnisse aus der Corporate Governance-Debatte auf den öffentlichen Sektor zu übertragen und zu verallgemeinern. Corporate Governance will die Selbststeuerung des Subsystems Unternehmen sicherstellen und auf diese Weise die Marktsteuerung der Volkswirtschaft unterstützen. Im Zentrum steht dabei die Lösung der Prinzipal-Agent-Problematik. Die Governance-Elemente "Anreize", "Machtausgleich" und "Fairness" finden sich auch im Ordoliberalismus. Auch im öffentlichen Sektor finden sich Governance-Problematiken und Prinzipal-Agent-Beziehungen: Demokratie, Bürokratie, Kollektivverhandlungen und Steuerung von Organisationen durch "voice" und "exit". Governance kann Staats- und Marktversagen verhindern. Wesentliche Elemente von Good Governance sind: Transparenz, Information, effizienz- und innovationsorientierte Anreizstrukturen, Kräfteausgleich, Verantwortung, Kontrolle, Fairness. (ICE2)

AbstractManuscript TypeReviewResearch Question/IssueWe survey the literature on corporate governance in banks in the US and international settings. We discuss how the specialness of banks, deposit insurance, high bank leverage, and bank regulation interact with bank governance. We evaluate bank governance from three perspectives: (1) maximizing bank equity value, (2) maximizing total enterprise value, and (3) maximizing social objectives. Our survey includes evidence on how bank governance differs from that of manufacturing firms. We also survey studies on managerial incentives in banks and their implications for bank performance and risk taking before and during the 2007–2008 financial crisis.Research Findings/InsightsThe high leverage (usually above 90 percent) of banking institutions gives rise to a trade‐off between strengthening equity governance and maximizing enterprise value. Aligning managers very closely with shareholders can give rise to strong incentives for risk shifting to the detriment of firm value. The bank risk choices might also go against the societal objectives of a stable financial system.Theoretical/Academic ImplicationsWe provide a framework for the optimal design of bank governance and bank regulation, considering the objectives of both depositors and society‐at‐large in addition to those of bank shareholders. This framework could be especially important in determining risk choices by banks and the effects of such on the stability of the financial system.Practitioner/Policy ImplicationsOur analysis of the literature surveyed has policy implications for bank regulation, top‐management compensation in banks, and directives for design of governance in banks. We discuss implications for direct regulation of banks and regulation of bank governance. The findings surveyed provide guidance for board independence, board size, board composition, and incentive features in top‐management compensation.

Advances in Financial Economics, volume 18, will present research on corporate governance both in the US and globally. The volume will aim at providing a deeper understanding of corporate governance practices, trends, innovations and challenges using international data.

Effective corporate governance, or the set of controls and incentives that drive top management, originates both outside and inside the firm and assures investors who hope to commit their capital. Essential when buying stocks in one's own country, effective corporate governance is even more important abroad, where information can be less reliable and investor influence (or protection) more limited. In this collection of articles from the Journal of Applied Corporate Finance, more than thirty leading scholars and practitioners discuss the possibilities and limitations of g