Corporate Governance Adrift

Corporate Governance Adrift

A Critique of Shareholder Value

The Cournot Centre series

Michel Aglietta and Antoine Rebérioux

Recent corporate governance scandals have brought to the fore the inherent contradictions of a capitalism dominated by financial markets. This challenging book by Michel Aglietta and Antoine Rebérioux argues that capitalism’s basic premise – that companies must be managed in the sole interest of their shareholders – is incongruent with the current environment of liquid markets, profit-hungry investors and chronic financial instability. The authors advocate rather that a company should be managed as an institution where common objectives are developed for all stakeholders, and that this democratic principle should be extended to the management of collective savings to reduce macro-financial instability. These two conditions, they contend, could make contemporary capitalism a vehicle for social progress.

Chapter 3: The Convergence of the European Model in Question

Michel Aglietta and Antoine Rebérioux

Subjects: business and management, corporate governance, economics and finance, corporate governance, financial economics and regulation, industrial organisation


The previous chapter led us to reject the ‘end of history’ thesis from a normative point of view, in its designation of shareholder value as the optimal form of corporate governance. In the present chapter, we examine this thesis from an empirical perspective. At present, according to Hansmann and Kraakman (2001), it should be possible to observe an international convergence of governance towards the US model, favourable to minority shareholders. The continental European model in particular is claimed to be losing its specificities, drawing closer to the standards prevalent in the United States. It is this diagnosis, widely shared by theorists, that we subject to critical examination. We limit our analysis to the German and French cases, as they are characteristic of the continental European model. The period studied is the 1990s, during which the rise of financial markets, supposedly at the origin of transformations in forms of governance, was most prominent. In the first part of this chapter, we present the US, German and French models and underline their principal differences.1 We aim to highlight the elements that make up these models, as brought out by the comparative literature on this subject. In the second part of the chapter, we appraise the way in which current transformations in the financial sphere are reshaping these elements. We also focus our attention on movements outside the financial sphere that may either reinforce or weaken the continental European model. It is on this basis that we are finally able to...

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