ABSTRACT What is the best corporate governance system? Is the Germanic corporate
governance system the best? The Japanese? The Anglo-Saxon? This article reviews some of
the relevant literature for answering this question. Particular attention is devoted to corporate
governance problems in developing countries. It emphasizes that the nature of problems
that corporate governance systems must deal with can be expected to vary with the state of
development of a country. Central to any discussion of corporate governance is the question
of how well a particular set of institutions mitigates the various principal/agent problems
that arise in a firm. The article thus reviews the basic principal/agent problem and discusses
its relevance for countries in different stages of development. It examines the advantages and
disadvantages of each type of corporate governance system in mitigating principal/agent
problems, and reviews the relevant empirical evidence for assessing their performance.