"Corporate Governance and Competition"
 

Abstract: The corporate governance systems operating in different countries are distinct. In the U.S. and U.K., it is often argued that the threat of takeover ensures managers act in the shareholders' interests. In countries such as Germany, Japan and France, it is suggested banks and other institutions act as monitors. There is some evidence that neither system is particularly effective. We argue that competition among firms may be more effective than either of these mechanisms in ensuring that resources are used efficiently.