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"The Divergence of the Italian and Japanese Corporate Governance Models: The Role of Institutional Shocks"

By Fabrizio Barca, Katsuhito Iwai, Ugo Pagano and Sandro Trento


The paper first considers a number of theoretical aspects surrounding the ambiguity of the legal framework defining the modern corporation and the two-way relation between technology and property rights. It then looks at the evolution of corporate governance through time, paying particular attention to the different roles played by the American occupation in the two countries - in Italy this involved the reinforcement of the state-owned corporations and family controlled pyramidal groups that had emerged during the fascist period, whereas in Japan the occupation forces destroyed the power of the great zaibatsu families. The analysis shows how inter-firm share holding can promote (Japan)or inhibit (Italy) the expansion of large corporations and discusses the mechanisms that have made each model self-sustaining after the initial institutional shocks.

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