Chapter 8: The Transformation of Corporate Europe
Photis Lysandrou INTRODUCTION 8.1 A distinguishing trait of the European corporate governance model is its balanced reconciliation of differing, and potentially conflicting, stakeholder priorities. This feature, however, has been disappearing fast as the leading European corporations declare their commitment to shareholder value, a position usually associated with American or British firms. Nevertheless, there is still evidence of continuity with past traditions. Although many continental European companies now claim to give overriding priority to shareholders’ interests, most of them still try to meet a broader range of social and economic objectives than is generally the case in the US or Britain. And although some of the distinctive institutions giving employees a say in the running of European corporations are under pressure to change, these institutions are still in place. In short, what seems to exist in continental Europe at present is a peculiar version of a capital market-oriented model of corporate governance that is at once more socially focused and more democratic than its Anglo-Saxon counterpart. One body of opinion holds that this situation is unsustainable on the grounds that adoption of any one part of the Anglo-Saxon model must inevitably lead to the adoption of the model as a whole.1 Thus to accept that shareholders’ interests take precedence over those of other stakeholders is to accept that corporations must be run in a more authoritarian style, that corporate managers must be given generous stock options, that free play must be given to hostile takeovers and so on. This construction of...
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