bre44380_ch33_867-886.indd 886 09/30/15 12:12 PM
886 Part Ten Mergers, Corporate Control, and Governance
INTERMEDIATE- Corporate governance Agency problems are inevitable. That is, we can never expect man-
agers to give 100% weight to shareholders’ interests and none to their own.
a. Why not?
b. List the mechanisms that are used around the world to keep agency problems under
control. - Finance by intermediaries Banks are not the only financial intermediary from which cor-
porations can obtain financing. What are the other intermediaries? How much financing do
they supply, relative to banks, in the United Kingdom, Germany, and Japan? - Corporate governance Why is transparency important in a market-based financial
system? Why is it less important in a bank-based system? - Corporate governance What is meant by dual-class equity? Do you think it should be
allowed or outlawed? - Financial system structure What kind of industries do you think should thrive in a
market-based financial system? In a bank-based system? - Pyramids Why are pyramids common in many countries but not in the United States or
United K ingdom? - Financial system structure What are some of the advantages and disadvantages of
Japanese keiretsus?