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

Warren Buffett places his $58 billion stock bets on Apple, American Express, and Goldman Sachs.

Rose Prince

2019-04-05 08:25:00 Friday ET

Warren Buffett places his $58 billion stock bets on Apple, American Express, and Goldman Sachs.

Warren Buffett places his $58 billion stock bets on Apple, American Express, and Goldman Sachs. Berkshire Hathaway owns $18 billion equity stakes in America

+See More

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena.

Charlene Vos

2023-02-21 08:27:00 Tuesday ET

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena.

Mark Granovetter follows the key principles of modern economic sociology to analyze social relations and economic phenomena. Mark Granovetter (2017) &

+See More

Carmen Reinhart and Kenneth Rogoff analyze long-run crisis data to find the root causes of financial crises for better bank capital regulation and asset market stabilization.

Laura Hermes

2023-06-28 09:29:00 Wednesday ET

Carmen Reinhart and Kenneth Rogoff analyze long-run crisis data to find the root causes of financial crises for better bank capital regulation and asset market stabilization.

Carmen Reinhart and Kenneth Rogoff delve into several centuries of cross-country crisis data to find the key root causes of financial crises for asset marke

+See More

Global debt surges to $250 trillion in the fiscal year 2019.

Olivia London

2019-12-28 09:36:00 Saturday ET

Global debt surges to $250 trillion in the fiscal year 2019.

Global debt surges to $250 trillion in the fiscal year 2019. The International Institute of Finance analytic report shows that both China and the U.S. accou

+See More

New Keynesian monetary policy framework

Monica McNeil

2023-09-21 09:26:00 Thursday ET

New Keynesian monetary policy framework

Jordi Gali delves into the science of the New Keynesian monetary policy framework with economic output and inflation stabilization. Jordi Gali (2015)

+See More

Can the Chinese renminbi become the next dual global reserve currency in addition to the American dollar?

Daphne Basel

2020-08-01 07:28:00 Saturday ET

Can the Chinese renminbi become the next dual global reserve currency in addition to the American dollar?

Technological advances, geopolitical risks, and pandemic outbreaks cannot shake investor confidence in the American dollar as the global reserve currency.

+See More