Abstract
In this paper it is argued that the notion of market-based corporate governance approach should be broadened to include the problem of owner-controlled firms and large block-holders and should be generalized to a model of multilateral negotiations and influence-seeking among a number of different stakeholders. In practice such a model should incorporate checks and balances between various stakeholders and outside constraints and must take into account how the political and legal system of a country affects this balance. In fact, even if there is theoretical reason to believe that ownership with its incumbent benefits and costs belongs to equity, this view is not dominant in most economies outside United Kingdom and United States of America. The broader notion of corporate governance offers hope for understanding better the developing economies in particular - and other economies in general - where anonymous stock markets are not likely to promote the necessary entrepreneurial activity and corporate restructuring. It suggests that other mechanisms, such as product market competition, peer pressure, or labor market activity, may compensate for this weakness, or more realistically, may be more promising targets for legal or political reform than the stock market.
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