Yale Bulletin and Calendar

April 12, 2002

Volume 30, Number 25

Florencio López-de-Silanes

SOM Institute to explore how corporations
are regulated by world's governments

The Yale School of Management (SOM) is launching a new research and teaching center to study the controls imposed by governments on corporations around the world, and the relationship between these legal regulatory frameworks and the global economy.

The International Institute for Corporate Governance (IICG) -- part of SOM's International Center for Finance -- was inaugurated by World Bank President Jim Wolfensohn in a ceremony held April 10 on campus. Wolfensohn also was awarded the school's annual International Center for Finance award for his contributions to business and society.

The IICG has a four-fold mission. It will conduct research, increase the body of knowledge about corporate governance in the private and public sector, disseminate information about the best practices internationally and interact with academic institutions throughout the world.

The director of the new center is Florencio López-de-Silanes, a leader and scholar in the areas of international corporate finance, financial markets, corporate governance and legal reform. (See related story, page 3.) Ira M. Millstein, the Eugene F. Williams Jr. Visiting Professor in Competitive Enterprise and Strategy, will chair the institute's advisory board. Millstein is also senior partner in the international law firm Weil, Gotshal & Manges LLP in New York City and a leading expert on antitrust, government regulation, and corporate governance matters.

"The research goal of the institute is to understand how corporate governance arrangements, including laws, regulations, and enforcement mechanisms shape capital markets and corporate policies around the world," explains López-de-Silanes.

"Corporate governance deals with control of corporations and the consequences of different modes of control for the efficiency of resource allocation. Different market and non-market economies take significantly different approaches to governance; the institute's research will seek to understand these differences," he added.

The institute's research will focus on comparative corporate governance and its implications for the structure of the firms, capital markets, and the economy. The research will be divided into five broad areas:

* the structure and effects of investor protection on the cost of capital and the development of financial markets;

* the structure of the firm's internal mechanisms of corporate control, such as disclosure, standards, boards of directors and committees;

* the structure of laws and litigation, including the role of courts and market regulators;

* financial intermediaries and financial crises; and

* corporate governance reform and institutional change.

The ultimate goal, explains López-de-Silanes, is to have an integrated view of the differences in legal and regulatory frameworks and a perspective on the relationship between the private sector and the government and its systematic and measurable differences in terms of governance structures.

More information on the IICG is available onlinw at http://icf.som.yale.edu/html/iicg/

Director of new institute is expert on the world economy

Florencio López-de-Silanes, the director of the new International Institute for Corporate Governance , is an expert on corporate governance and comparative institutions.

López-de-Silanes joined the Yale School of Management (SOM) faculty in September as professor (adjunct) of finance and economics. At that time SOM Dean Jeffrey E. Garten noted, "Florencio is one of the great scholars in a critical arena of the world economy. He will contribute greatly to the rich research agenda already underway at the International Center for Finance."

López-de-Silanes is a founding member of the Blue Ribbon Panel on Corporate Governance in Russia and the Committee on Best Corporate Practices in Mexico. He has also been an adviser to the governments of Russia, Peru, Malaysia, Egypt, Yemen, Columbia, Costa Rica and Mexico on issues of financial markets' regulation, corporate and bankruptcy law reform, industrial policy and privatization.

Recently, he worked as a consultant to the International Monetary Fund and to The World Bank on issues of corporate governance.

He received Harvard's Wells Prize for the Best Dissertation in Economics (1995), the National Award of Law and Economics of the National Association of Law and Economics in Mexico (1996), the Brattle Prize for distinguished paper in the Journal of Finance of the American Finance Association (1999) and the Jensen Prize for the best papers published in the Journal of Financial Economics in the areas of Corporate Finance and Organizations (2000).

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Campus Notes