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date: 26 September 2020

(p. 559) Subject Index

(p. 559) Subject Index

Advertising, 6
Agnelli pyramid, 352
Asset price bubbles
economic effects of, 418, 422–23
and effcient market hypothesis, 406–407
monetary policy and, 419–22, 423
nature of, 408–09
in real estate, 414–15, 416–18
South Sea, 411–12
in stock markets, 412–16
in tulip bulbs, 410
Banks
financial bubbles and, 175–79, 238–41
principal/agent probems and, 165, 169–70, 238–41
state created, 543
state ownership of, 183–85
Bretton Woods System, 30–33
Capital markets. See Financial markets
Capitalism. See also Legal institutions, monopoly
advantages of, 4–5, 12, 139–45, 281–83, 537–39
competition within, 116–17
and corporations, 3, 120
definition of, 1–3, 119, 278–81, 328–29, 536–37
disadvantages of, 5–11, 12, 147–50
economic fluctations of, 150–54, 237–41, 408–09, 541–42
financial markets, role of, 163–67, 407–08
freedom under, 538–39
and Mercantilism, 17–21
oligarchic, 119–20
reform of, 542–43
state-guided, 120
Case-Shiller Indexes, 405, 417–18, 424
Chaebols, 511–12
Cobden-Chevalier Treaty, 22
Compensation of managers, 7–8, 9–10
Contracts
enforcability, 261–65
excusing performance, 266–69
interpretation of, 269–70
information and, 251–54
as legal institutions, 42–43
nature of, 2
for managerial compensation, 372–74
termination of, 265–66
uncertainty and, 2, 251, 255–60
Corn Laws, 22
Corporate governance, see also ownership structures and individual countries
boards of directors and, 344–45, 383–85
dominant sharholders and, 349–56
dual class shares and, 353–54
in East Asia, 514–18
importance of, 42, 329–31, 340–42, 356–58
shareholder democracy, 342–44
stakeholders (other), 345–46
takeovers (hostile), 346–48
Corporations
principal/agent problems in, 221–24, 232–37, 329–31, 334–37
capabilities perspective of, 221–22, 226–28, 229–31
as contract nexus, 221–22, 224–26, 228–29
multidivisional, 232–34, 316
rise of, 242–44, 332–34
transnational, 316–19
Dodd-Frank Act, 397–98
Dual class shares, 353–54
Dutch East India Company, 333
East Asian Model, see also Japan and South Korea
control of companies, 514–16
corporate governance in, 514–18
industrial policy in, 525–27
Effcient market hypothesis
asset price bubbles and, 406–407
mergers and, 440
Ellison, Lawrence J., 7–8, 9
Entrepreneurs and capialism, 118–19, 121–23
Executive compensation, see managerial compensation
Factor shares paradox, 145–47
Financial Crisis Inquiry Commission, 390, 396–97
Financial markets, see also asset price bubbles
access to, 171–72
bubbles in, 11, 174–79, 189–90
crises in, 28–29
and dominant shareholders, 98
and economic growth, 163–67
and income inequality, 172–74
international trade, 170–71
managerial compensation and, 389–98 (p. 560)
politics affecting
in developed countries, 82–87
in developing countries, 87–93, 188
in Europe, 99, 103–04, 186–87
in United States, 99–104, 183
regulation of, 179–82, 239–41
Federalism and financial markets, 100–02
Free trade
collapse of, 26–30
in 19th century, 22–25
Germany
codetermination and capitalism, 96
Glass-Steagall Act, 95, 499
Globalization, 33–35
Gold standard, 23–24, 29–30
Great Britain, 22–24
economic rise of,
Income inequality
capitaliam and, 143–50
and financial markets, 172–74
and monopoly, 312–16
Industrial Revolution, 2, 11, 22–25, 129–33, 137–39
Innovation
and entrepreneurs, 121–23
and capitalism, 539–40
and growth, 134–35, 137–39, 283–84
and patents, 123–25, 212–15
theory of, 135–37
James, LeBron, 7
Japan
asset bubbles in, 414–15
corporate governance in, 514–18
corporate directors in, 88
keiretsu, 511–12, 520–21
main banks in, 512–13
supply relationships in, 518–22
zaibatsu, 509–12, 522
Keiretsu, 511–12, 520–21
Legal institutions
defined, 39–40, 41–45
deterninants of, 54–64
development and, 40, 48–49, 64–65
economic effects of, 49–53
international trade and, 48, 49, 53, 57
measurement of, 45–48
ownership structure and, 469–71
Lerner index, 302
Managerial compensation
agency theory and, 372–74, 383–89
boards of directors and, 383–85
consultants and, 385–86
Dodd-Frank Act, 397–98
financial crisis and, 389–98
Financial Crisis Inquiry Commission, 396–97
growth of, 377–79
market forces and, 387–89
as perks, 387
principal/agent problems and, 383–89
public interest in, 371–72
stock options and, 386–87
structure of, 374–77
Market failures
asymmetric information, 289–91
externalities, 288–89
general, 8, 295–98
natural monopolies, 287–88
public goods, 285–87
state correction of, 291–93
Markets, efficiency of, 281–83
Mercantilism, 17–21
Mergers, see also merger waves
behavioral theories of, 426–27, 442–45, 446–48, 452–54
and efficient capital markets, 440
financing of, 452
hubris hypothesis of, 444
managerial theories of, 10–11
market for corporate control hypothesis, 441–42, 444, 448–51
neoclassical theories of, 426–27, 445, 446–51, 452–54
P/E magic and, 444
productivity, effect on, 434, 437
profits, effect on, 428–33, 437
sales, effect on, 429, 435–36, 437
shareholder returns, effect on, 437–41, 446–48
takeovers (hostile), 346–48, 441–42, 444, 448–51
wealth destruction from, 454
Merger waves
evidence of, 10–11, 427–28
industry shocks hypothesis, 446, 451
managerial discretion hypothesis of, 442–44, 446–48
overvaluation hypothesis of, 445
q theory of, 445, 451
and stock market booms, 10–11, 427–28
in United Kingdom, 488
U.S. wave of 1890s, 479–81
Monopoly
advertising and, 303–04
collusion and, 303
entry and, 304–06
extent of, 300–02
excess capacity and, 304–06
and income inequality, 312–16
international competition and, 306–08
and social welfare, 6–8, 308–12
Moral hazard, 253–54, 373
Morgan, J.P., 475–78
Ownership structures, see also corporate governance and individual countries (p. 561)
dispersed versus concentrated, 463–68
legal institutions and, 469–71
politics and, 472–74
Patents, 123–25, 212–15
Policy reform, 65–67
Principal/agent problems, see also compensation of managers, corporate governance, and mergers
banks and, 165, 169–70
in financial markets, 163–65
managers and shareholders, 8–11, 221–24, 232–37, 329–31, 334–37
and shareholder value, 337–39
Property rights
capitalism and, 3, 208–12, 216–17
definition of, 205–06
growth and, 209–10
intellectual, 212–15, 216–17
political liberalism and, 206
natural rights and, 206–07
socialism and, 207–08
utilitarianism and, 207
Rent seeking, 6–8, 56–57
Sarkozy, Nicolas, 536–37, 541
Social conflict theory, 54–58
South Korea,
banks in, 513
chaebols, 511–12
corporate governance in, 514–18
supply relationships in, 522–23
South Sea bubble, 411–12
State, the
as a community, 294–95
as corrector of market failures, 292–93
and economic development, 320–21
industrial policy in East Asia, 525–27
as regulator, 179–82, 239–41
Taiwan, 523
Taxes and innovation, 125
Tobin’s q
country averages, 335–36
in Japan, 512
and merger waves, 445, 451
for merging companies, 449–50
Transaction costs
and firms, 224–26, 228–29
Treaty of Versailles, 27
Tullip bulb bubble, 410
Uncertainty
and contracts, 2, 251
United Kingdom
institutional shareholders in, 487–88, 492–96
merger waves in, 488
ownership structure in, 474–75, 484–92
taxation and ownership structure, 488–89
United Nations Conference on Trade and Development, 245, 318, 323
United Nations Development Programme, 150
United States
economic rise of, 26–28
institutional shareholders in, 492–96
investment bankers and ownership structure, 475–79
merger wave of 1890s, 479–81
NYSE and ownership structure, 481–83
ownership structure in, 474–75, 483–84, 489–92
populism and capitalism in, 94–95, 97–98
Wage stagnation, 147–50