Corporate liquidating dividend
At the beginning of the nineties, the American system of corporate finance and governance was strongly blamed for its presumed bias towards short-term financial concerns, stemming from shareholders' pressures for immediate profits.
Critics contrasted the American model with that prevalent in Japan and Germany, where a consensus-building approach was supposed to cope successfully with the interests of different stakeholder groups in the company.
It should be noted, however, that the ownership of a reasonable number of U. publicly held corporations involves sizeable, and even majority, blocks of shares - partly due to the 1980s wave of leveraged buyouts and hostile takeovers.
Contrary to the Berle and Means' widely known prediction, Holderness et al.
The mechanisms of corporate governance in the United States; 4. The analysis thereafter concentrates on assessing the efficacy of each of the pillars purportedly buttressing the American system of corporate control.
The shortage of large active investors in American publicly held firms; 3. Section 1 turns its focus to the reasons accounting for the still relative scarceness of large shareholders in American publicly held companies.
In fact, in contrast with Japan, France and Germany, the lion's share of publicly held companies' equity capital in the United States is owned by households, with non-financial enterprises and banks holding starkly smaller fractions (see table 1).The development in these countries of co-operative relationships among the firm's managers, creditors, employees, suppliers and clients was regarded as an efficient approach to redressing some important market failures, allowing to lower transaction costs by mitigating informational asymmetries as well as encouraging relationship-specific investments, particularly in human capital.Over the last decade, however, a number of interrelated events have turned the tide in favour of the American model of corporate governance.Next section turns on the reasons for the existence of relatively few large investors and their disincentives to monitor management in American companies.
Section II analyses the limits underlying each of the chief governance mechanisms operating in the American corporate environment.
Management may furthermore take decisions with a view to entrenching themselves in the firms, making their dismissal costlier.