Alessandro Zattoni and William Judge , eds. Corporate Governance and Initial Public Offerings, Cambridge University Press, Cambridge, 2012, 568 pp, ISBN 978‐1‐1‐7‐01686

• Date: 01 November 2013
• Published date: 01 November 2013
• Author: Maureen Muller‐Kahle
• DOI: http://doi.org/10.1111/corg.12020

Book Review

Alessandro Zattoni and William Judge, eds. Corporate Governance and Initial Public Offerings,

Cambridge University Press, Cambridge, 2012, 568 pp, ISBN 978-1-1-7-01686

With corporate governance garnering so much atten-

tion, there are still few resources available for scholars

and practitioners in the area of comparative corporate gov-

ernance. In this ambitious undertaking, CGIR editors,

Alessandro Zattoni and William Judge, worked with 32

other scholars with the goal of obtaining a better under-

standing of international corporate governance within the

context of initial public offerings (IPOs). The result is a well-

organized compilation of the status of corporate governance

and IPOs in 21 countries that covers 73 percent of the

world’s GDP. This book will be invaluable for anyone inter-

ested in up-to-date information on governance environ-

ments and the status of IPOs of any of the 21 countries

analyzed. Most of what we know about governance is based

on studies of US f‌irms. Using the country expertise of 32

scholars, the book offers a detailed analysis of governance

and IPOs of large well-developed countries such as the US,

Germany, Canada, Japan, and the United Kingdom, large

emerging market countries such as India, China, and Russia

and unique countries such as Nigeria, Israel, and Saudi

Arabia.

The introduction, written by the editors, is incredibly

informative as they provide an overview of the state of cor-

porate governance,a discussion of internal and external gov-

ernance mechanisms and a summary of each country’s

governance environment. Zattoni and Judge show us the

differences between countries in terms of both internal gov-

ernance mechanisms (board composition, CEO duality,

executive compensation, shareholder dispersion, and domi-

nant shareholder type) and external governance mecha-

nisms (legal system, market for corporate control, business

groups, degree of corruption, and degree of institutional

collectivism).

In addition, the introduction includes a cluster analysis of

all 21 countries using all ten governance mechanisms with

the goal of identifying countries with similar governance

environments. Their analysis suggests that these 21 coun-

tries fall into seven clusters, with developed countries falling

into one of the four developed clusters. While it is no sur-

prise that Australia, Canada, Netherlands, UK, and US fall

under the “developed market” cluster, other developed

countries like Italy, Germany and Switzerland end up in the

“developed relations” cluster due to high levels of family/

bank relationships impacting governance, while Belgium,

Israel, Singapore, and Sweden fall into the “developed

niche” due to shared reliance on business groups and/or

familyownership. Interestingly,Japan’s governance environ-

ment is so unique that it is the only country in the “devel-

oped oriental” cluster. Emerging market countries comprise

two clusters with China, Mexico, and Nigeria in the “emerg-

ing relations” and India and Russia in the “emerging

owners” cluster. China, Mexico, and Nigeria share low

levels of executive compensation, high levels of corruption,

highly concentrated shareholding, and established use of

business groups. Corruption and high levels of owner con-

centration make India and Russia unique. The book’s cluster

analysis clearly shows the wide range of governance envi-

ronments of these 21 countries.

Following the comprehensive introduction, there are 21

chapters in the book, with each chapter following a stan-

dardized format, which makes it easy to read and access

specif‌ic information. Each chapter provides an overview of

each country’s make-up of internal and external governance

mechanisms before analyzing the IPO markets of each

country. Space does not permit a review of each chapter, so

I will showcase the chapters based on countries with the

most and least active IPO markets. Between 2006 and 2008,

Japan had the most active IPO market with 334 IPOs, while

Mexico was the least active market with only nine IPOs.

Hideaki Sakawa (Nagoya City University) and Naoki

Watanabel (Toyo University), authors of the chapter on IPOs

in Japan, provide a comprehensive examination of gover-

nance in Japan. They describe the governance system as one

that is heavily inf‌luenced by the banks, who are often the

dominant shareholders, and by the large number of business

groups (industrial and f‌inancial keiretsus). Japan’s Tokyo

Stock Exchange introduced new codes of corporate gover-

nance in 2009. Sakawa and Watanabel identify some weak-

nesses with Japan’s corporate governance system including

high levels of insiders on the board, few women or foreign

directors, the presence of Jomokai (top management team

structure which leads to the absence of a chairperson of the

board), and lack of sub-committees on the board. Nonethe-

less, Japan’s IPO activity was the most active of all the coun-

tries in the study. Interestingly, many of Japan’s IPOs are

from long-established companies, with the average age of

f‌irms being 22 years, and from companies in the consumer

goods and services, telecommunications, and utilities indus-

tries. Furthermore, venture capital is largely absent as

founders tend to remain the major shareholder.

586

Corporate Governance: An International Review, 2013, 21(6): 586–587

© 2013 John Wiley & Sons Ltd

doi:10.1111/corg.12020