Shleifer is from Harvard University. Vishny is from the University of Chicago. Prepared for the Nobel Symposium on Law and Finance, Stockholm, August 1995. We are grateful to Oliver D. Hart for many conversations, to Doug Diamond, Frank Easterbrook, Milton Harris, Martin Hellwig, James Hines, Tor Jonsson, Steve Kaplan, Rafael La Porta, Florencio Lopez-de-Silanes, Raghu Rajan, David Scharfstein, René Stulz, and Luigi Zingales for comments, and to the NSF for financial support.
This article surveys research on corporate governance, with special attention to the importance of legal protection of investors and of ownership concentration in corporate governance systems around the world.