Library

Home > Library > The cross-country evolution of corporate ownership and governance

The cross-country evolution of corporate ownership and governance

Author Andy Yeh Alpha

This research article provides our mathematical analysis of the gradual evolution of corporate ownership concentration around the world.

Description:

We derive and develop a simple and intuitive model that shines fresh light on the relentless debate over whether corporate ownership converges to the Berle-Means modern corporation with high stock ownership dispersion. Our model takes into account the importance of both protective legal institutions and firm-specific asset arrangements. The main analytical result is that incumbent stock ownership concentration either persists or declines depending on the relative importance of these protective arrangements. Specifically, our model predicts: (a) high stock ownership dispersion in nations that impose legal limits on blockholders's clout to expropriate minority shareholder rights, and (b) high stock ownership concentration in nations that primarily rely on asset specificity as a form of investor protection. In this view, both the path-dependency and convergence theories complement each other in the broader context of corporate governance.

 

Our empirical analysis of international data suggests at least partial convergence toward the Berle-Means modern corporation with high stock ownership dispersion. It is thus plausible to infer the existence of path-dependent forces on corporate ownership concentration. Nevertheless, this result does not preclude the more dynamic form of functional convergence toward greater stock ownership dispersion through the general tendency of non-U.S. public firms to cross-list on the major U.S. stock exchanges. This trend introduces stringent disclosure and governance requirements to a wider set of multinational corporations. In essence, these empirical results suggest a case for the co-existence of the path-dependency and functional-convergence stories. These complementary stories arise as stable mates and represent some partial elements of truth in explaining the cross-country variation in corporate ownership and governance structures.

 

Blog+More

Zuckerberg announces his major changes in Facebook's newsfeed algorithm and user authentication.

Becky Berkman

2018-01-07 09:33:00 Sunday ET

Zuckerberg announces his major changes in Facebook's newsfeed algorithm and user authentication.

Zuckerberg announces his major changes in Facebook's newsfeed algorithm and user authentication. Facebook now has to change the newsfeed filter to prior

+See More

Apple, Alphabet, Microsoft, Amazon, and Facebook have become the most valuable public companies in the world.

Olivia London

2017-05-13 07:28:00 Saturday ET

Apple, Alphabet, Microsoft, Amazon, and Facebook have become the most valuable public companies in the world.

America's Top 5 tech firms, Apple, Alphabet, Microsoft, Amazon, and Facebook have become the most valuable publicly listed companies in the world. These

+See More

Former Fed Chair Alan Greenspan discerns asset bubbles in the American stock and bond markets in early-2018.

Jonah Whanau

2018-01-21 07:25:00 Sunday ET

Former Fed Chair Alan Greenspan discerns asset bubbles in the American stock and bond markets in early-2018.

As he refrains from using the memorable phrase *irrational exuberance* to assess bullish investor sentiments, former Fed chairman Alan Greenspan discerns as

+See More

Netflix raises its prices by 13% to 18% for U.S. subscribers.

Chanel Holden

2019-01-25 13:34:00 Friday ET

Netflix raises its prices by 13% to 18% for U.S. subscribers.

Netflix raises its prices by 13% to 18% for U.S. subscribers. The immediate stock market price soars 6.5% as a result of this upward price adjustment. The b

+See More

Our proprietary alpha investment model outperforms most stock market indexes from 2017 to 2025.

James Campbell

2025-02-02 11:28:00 Sunday ET

Our proprietary alpha investment model outperforms most stock market indexes from 2017 to 2025.

Our proprietary alpha investment model outperforms most stock market indexes from 2017 to 2025. Our proprietary alpha investment model outperforms the ma

+See More

Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI).

Chanel Holden

2018-07-19 18:38:00 Thursday ET

Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI).

Goldman Sachs chief economist Jan Hatzius proposes designing a new Financial Conditions Index (FCI) to be a weighted-average of interest rates, exchange rat

+See More