Global Finance and Social Europe

Global Finance and Social Europe

New Directions in Modern Economics series

Edited by John Grahl

With global finance reshaping the world economy, this insightful new book provides a full account of the EU’s financial integration strategy, together with a critical assessment arguing the case for social control over global finance. Written by acknowledged experts in European finance, this book discusses key issues from finance to general social developments, encompassing social security systems, employment relations, household saving and borrowing, and the question of economic stability. Thus far, America has been pre-eminent both in global financial markets and international banking – so how should the European Union meet this challenge? Global Finance and Social Europe constructively argues that an active response is required and highlights the importance of an integrated European financial system.

Chapter 8: The Transformation of Corporate Europe

Photis Lysandrou

Subjects: economics and finance, financial economics and regulation, post-keynesian economics, social policy and sociology, economics of social policy


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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