04 Roe Political Determinants of Corporate Governance (Jan 10)

04 Roe Political Determinants of Corporate Governance (Jan 10)

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ROE, POLITICAL DETERMINANTS OF CORPORATE GOVERNANCE Dependent variable : Corporate governance system: diffuse v. concentrated shareholding Dimensions on which two types of ownership vary: --separation of ownership and control --time horizons of investors --reliance on equity financing --maximizing shareholder v. stakeholder value --managerial independence, rewards, threats --% of national income consumed by gov’t --distribution of income --employment protection
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Independent variable : --power of labor to disrupt production; “social democracy” --less competitive product markets Problems with analysis a. Empirical: import competition well developed in “concentrated” ownership ecos --financial, not product, mkts may be less competitive b. Theoretical: the logic of the argument
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Unformatted text preview: --Can diffuse shareholders monitor management more effectively than dominant owners with direct control?--Is management less secure in diffuse shareholder system? --Where employees “protected,” at expense of owners…or management? c. Theoretical: What is “social democracy”--definition of “social democracy” shifts--arrangements attributed to social democracy enacted by center-right governments in major countries; Roe tests only post-1980, but corporate governance differences emerge much earlier--labor militancy? Days lost to strikes lower in concentrated ownership countries--does labor power lead to concentrated ownership…or does lack of labor power facilitate emphasis on “shareholder value”?...
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