Home > Library > 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.
2017-11-17 09:42:00 Friday ET
The Trump administration garners congressional support from both Senate and the House of Representatives to pass the $1.5 trillion tax overhaul (Tax Cuts &a
2020-10-06 09:31:00 Tuesday ET
Strategic managers envision lofty purposes to enjoy incremental consistent progress over time. Allison Rimm (2015) The joy of strategy: a bu
2019-01-02 06:28:00 Wednesday ET
New York Fed CEO John Williams listens to sharp share price declines as part of the data-dependent interest rate policy. The Federal Reserve can respond to
2023-09-28 08:26:00 Thursday ET
Daron Acemoglu and James Robinson show a constant economic tussle between society and the state in the hot pursuit of liberty. Daron Acemoglu and James R
2019-08-12 07:30:00 Monday ET
Facebook reaches a $5 billion settlement with the Federal Trade Commission over Cambridge Analytica user privacy violations. The Federal Trade Commission (F
2020-03-19 13:39:00 Thursday ET
The business legacy and sensitivity of Steve Jobs can transform smart mobile devices with Internet connectivity, music and video content curation, and digit