European Corporate Governance

Abstract

This project is primarily concerned with the emerging European system of corporate governance. This ongoing "field experiment" is a unique opportunity to observe the complex process of constructing a new corporate governance system, including a new set of relationships between stakeholders. Key questions here include the following:

  • Which political coalitions that have supported the passage of important directives in the areas of company law, industrial relations and financial regulation?
  • Is it possible to identify a specific European system of corporate governance, or does Europe remain a collection of national corporate governance regimes?
  • What role does "worker voice" through company law and the industrial relations system play in this emerging system? And:
  • What has the impact of these directives been on company practice?

Preliminary observation of this emerging system allows for the formulation of a number of theses guiding the research:

  1. existing typologies of corporate governance systems, which are either dualistic ("insider” versus “outsider" systems), or based on three categories (Anglo-Saxon, Rhineland, and Mediterranean systems) are inadequate to capture the richness of the process. In particular at least two dimensions need to be included: one for the strength of “voice” of owners (capital) and one for employees (labor) in corporate governance. Furthermore, these dimensions should be conceptualized as a continuum of the strength of voice rather than distinct equilibria;
     
  2. the need for the analytic separation of the dimensions “capital” and “labor” becomes clearer when examining the nature of European legislation on corporate governance. On the one hand directives concerning the capital side (e.g. transparency and accounting, regulation of mutual funds, etc.) show a clear movement in the direction of Anglo-Saxon style capital markets, resulting in a shift in power from large “insider” shareholders to “outsider” institutional investors holding smaller stakes. On the other hand, directives regarding worker participation rights (e.g. European Works Councils directive, directive on Information and Consultation in member states, etc.) support moderate levels of employee voice in companies, in the form of information and consultation rights which are “in between” the Anglo-Saxon system (where employees have little or no voice) and countries like Germany, Sweden and Norway, where employees have strong codetermination rights (i.e. the capacity to block management decisions);
     
  3. the emerging European system neither replicates an existing national system nor follows a "path-independent" constructivist logic;
     
  4. key actors in the political/regulatory aspects of the European corporate governance system includes: nation-states, the European commission, European-level actors such as the European Trade Union Confederation.
Sidebar
Project Management
Duration
since 2008
Funding
WZB