This book develops a new framework - the stakeholder model - that helps to understand corporate finance and governance in modern society, where the sources of people's happiness have shifted from monetary to non-monetary factors. The book takes a more comprehensive approach than is typically found in the standard economics and finance literature, by explicitly incorporating both the monetary and non-monetary interests of stakeholders and by examining the value creation of corporations from a much broader perspective. Specifically, the book addresses contemporary issues concerning corporate finance and governance worldwide, including: How should we define corporate value in stakeholder society? What is the role of modern corporations? What are the principles underlying corporate financing decisions? To what extent should shareholder rights be enhanced? What determines the effectiveness of a company's board of directors? What missions do firms set out and what is the role of mission statements? How can we understand the diversity of financial and governance systems among different countries? What legal and institutional reforms enhance or diminish corporate value in stakeholder society? The book will answer these questions theoretically and empirically.

This book develops a new framework (stakeholder model) that helps understand corporate finance and governance in modern society, where (especially in developed countries) the sources of people's happiness have shifted from monetary to non-monetary factors. The book takes a more comprehensive approach by explicitly incorporating the (monetary and non-monetary) interests of stakeholders and by examining the value creation of corporations from a much broader perspective. Specifically, the book addresses contemporary issues concerning corporate finance and governance all over the world, including: How should we define firm value in stakeholder society? What is the role of modern corporations? What are the principles of corporate financing decisions? To what extent should shareholder rights be enhanced? What determines the effectiveness of the board of directors? How can we understand the diversity of financial and governance systems among different countries? The book will answer these questions theoretically and empirically.The theoretical analyses build upon recent developments in incomplete contract theory, relational contract theory, multitask principal-agent models, economics of happiness, behavioral economics and neuroeconomics. The empirical studies presented in the book use large datasets on corporate finance, and survey and interview evidence from Japan, Germany, and the US. The book demonstrates how we can apply those insights to understand the legal and institutional diversity of corporate governance across developed countries.