CORPORATE LAW'S LIMITS managerial agency costs from dissipating shareholder value would be very costs to shareholders enough. I suggest why these costs to shareholders ary from nation-to-nation and firm-to-firm Moreover, by shifting our focus from legally malleable private benefits to managerial agency costs, we can see why sub-standard corporate law persists in a few richer, well-developed nations. Low quality law might in some nations be a symptom of weak separation, not its base-line cause If these kinds of managerial agency costs from dissipating shareholder value would be too high anyway for there to be much separation even if corporate law were perfect, then there's little reason for the players(public policy-makers, investors, founding and family owners)to build good corporate law, because it wouldnt be much used anyway A second theoretical limit afflicts the quality-of-corporate-law argument. High quality corporate law could propel diffusion. But it can just as easily propel concentration. Its effect is indeterminate. High qualit porate lay blockholders, because good law channels blockholders away from stealing from distant stockholders and into productive activity(such as overcoming shareholder free rider and informational problems or monitoring managers for example). Channeling blockholders away from anti-stockholder action should mean in theory that improving the quality of corporate law could all else equal, increase blockholding as easily as it could decrease it. Minority stockholders have less reason to fear the big blockholders when corporate law protects them. If the blockholders increase value, then we could see more of them develop, not fewer of them, as corporate law quality improved Good corporate law that stymies a grasping controller, or good substitutes like effective stock exchanges, effective reputational intermediaries and the like, is good for a nation to have. It reduces the costs of running a large enterprise. But it is insufficient to induce ownership separation. It's thus at least possible that some reformers may be pinning their hopes too heavily on good corporate law institutions to propel development in third world and transition countries4 CORPORATE LAW’S LIMITS managerial agency costs from dissipating shareholder value would be very high after full separation, and b) concentrated ownership reduces those costs to shareholders enough. I suggest why these costs to shareholders vary from nation-to-nation and firm-to-firm. Moreover, by shifting our focus from legally malleable private benefits to managerial agency costs, we can see why sub-standard corporate law persists in a few richer, well-developed nations. Low quality law might in some nations be a symptom of weak separation, not its base-line cause. If these kinds of managerial agency costs from dissipating shareholder value would be too high anyway for there to be much separation even if corporate law were perfect, then there’s little reason for the players (public policy-makers, investors, founding and family owners) to build good corporate law, because it wouldn’t be much used anyway. * * * A second theoretical limit afflicts the quality-of-corporate-law argument. High quality corporate law could propel diffusion. But it can just as easily propel concentration. Its effect is indeterminate. High quality corporate law makes distant stockholders comfortable with blockholders, because good law channels blockholders away from stealing from distant stockholders and into productive activity (such as overcoming shareholder free rider and informational problems or monitoring managers, for example). Channeling blockholders away from anti-stockholder action should mean in theory that improving the quality of corporate law could, all else equal, increase blockholding as easily as it could decrease it. Minority stockholders have less reason to fear the big blockholders when corporate law protects them. If the blockholders increase value, then we could see more of them develop, not fewer of them, as corporate law quality improved. * * * Good corporate law that stymies a grasping controller, or good substitutes like effective stock exchanges, effective reputational intermediaries and the like, is good for a nation to have. It reduces the costs of running a large enterprise. But it is insufficient to induce ownership separation. It’s thus at least possible that some reformers may be pinning their hopes too heavily on good corporate law institutions to propel development in third world and transition countries