ABSTRACT
This chapter presents a brief overview of modern corporate governance — the concept, the complexities, and the challenges for policy. It describes a perspective that extends beyond most general treatments of the topic, is to address the international dimension of corporate governance. The theory of corporate governance places great stress on the concept of ‘incomplete contracts’. The corporate governance issue, and the aim of institutional development to strengthen governance, is to ensure that management’s interests are aligned with those of the shareholders. The insider model of corporate governance is usually associated with continental Europe and Japan. Japan presents an intriguing case in the development of corporate governance systems and illustrates how national idiosyncrasies can establish significant barriers to the international integration of industry. In summary, the industrial history and the level of institutional development in a particular country substantially shapes the insider model of corporate governance in countries where such a model predominates.
