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

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut press conference.

Chanel Holden

2018-03-21 06:32:00 Wednesday ET

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut press conference.

Fed Chair Jerome Powell increases the neutral interest rate to a range of 1.5% to 1.75% in his debut post-FOMC press conference. The Federal Reserve raises

+See More

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization.

Charlene Vos

2023-06-07 10:27:00 Wednesday ET

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization.

Anat Admati and Martin Hellwig raise broad critical issues about bank capital regulation and asset market stabilization. Anat Admati and Martin Hellwig (

+See More

Tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom.

Dan Rochefort

2019-05-03 11:29:00 Friday ET

Tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom.

Key tech unicorns blitzscale business niches for better scale economies from Uber and Lyft to Pinterest, Slack, and Zoom. LinkedIn cofounder and serial entr

+See More

China allows its renminbi currency to slide below the psychologically important threshold of 7-yuan per U.S. dollar.

Charlene Vos

2019-09-13 10:37:00 Friday ET

China allows its renminbi currency to slide below the psychologically important threshold of 7-yuan per U.S. dollar.

China allows its renminbi currency to slide below the key psychologically important threshold of 7-yuan per U.S. dollar. A currency dispute between the U.S.

+See More

Many young and mid-career Americans fall into the financial distress trap in rural communities.

John Fourier

2019-08-01 11:33:00 Thursday ET

Many young and mid-career Americans fall into the financial distress trap in rural communities.

Many young and mid-career Americans fall into the financial distress trap in rural communities. A recent analysis of 25,800 zip codes for 99% of the U.S. po

+See More

What are the best online stock market investment tools?

Amy Hamilton

2021-07-07 05:22:00 Wednesday ET

What are the best online stock market investment tools?

What are the best online stock market investment tools? Stock trading has seen an explosion since the start of the pandemic. As people lost their jobs an

+See More