Why does corporate governance - front page news with the collapse of Enron, WorldCom, and Parmalat - vary so dramatically around the world? This book explains how politics shapes corporate governance - how managers, shareholders, and workers jockey for advantage in setting the rules by which companies are run, and for whom they are run. It combines a clear theoretical model on this political interaction, with statistical evidence from thirty-nine countries of Europe, Asia, Africa, and North and South America and detailed narratives of country cases. This book differs sharply from most treatments by explaining differences in minority shareholder protections and ownership concentration among countries in terms of the interaction of economic preferences and political institutions. It explores in particular the crucial role of pension plans and financial intermediaries in shaping political preferences for different rules of corporate governance. The countries examined sort into two distinct groups: diffuse shareholding by external investors who pick a board that monitors the managers, and concentrated blockholding by insiders who monitor managers directly. Examining the political coalitions that form among or across management, owners, and workers, the authors find that certain coalitions encourage policies that promote diffuse shareholding, while other coalitions yield blockholding-oriented policies. Political institutions influence the probability of one coalition defeating another.

Peter Gourevitch is a Harvard University trained political scientist with expertise in international relations and comparative politics. In 2005-06, he was a visiting fellow at the Russell Sage Foundation where he worked on a book comparing managerial oversight with institutional investors from four countries. Concurrently, he was a fellow at The John Simon Guggenheim Memorial Foundation. Gourevitch is a member of the Council on Foreign Relations and chairs its selection committee for International Affairs Fellowships. He is also a past president of the Association of Professional Schools of International Affairs and is currently a Professor of Political Science at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego.

James Shinn is Chairman of Teneo Intelligence, Lecturer at Princeton University and regular contributor to Institutional Investor magazine on political risk. In addition to his role at Teneo, Dr. Shinn advises several technology firms.