ABSTRACT
A good deal of the extant literature on corporate governance is based on a prioristic theorizing and tends to emphasize problems of collective action that prevent shareholders from monitoring managers and problems that emerge in the agent-principal relationship. Intercountry differences are greater in terms of paths to privatization than in the laws affecting corporate governance. A major difficulty in evaluating corporate-governance structures is that all models of corporate governance represent second-best solutions to the principal—agent problem. Glavunion is a large Czech manufacturer of flat glass whose majority owner is the Belgian glass-making firm Glaverbel. Fala, a Polish textile and clothing company, is an example of foreign investment with a solely financial majority shareholder who exercises governance power. Banks can remain holding the debt, while the assets go to a foreign investor, which could place a bank in the position of owning a share of the firm, enabling it to exercise a governance role.
