Does Company Ownership Matter?

Does Company Ownership Matter?

The Cournot Centre series

Edited by Jean-Philippe Touffut

Do modes of management depend on company ownership? Does macroeconomic performance rely on shareholder value? The contributions collected in this book explore these questions from economic, historical and legal perspectives. They examine company ownership through the study of national institutions, with particular focus on North America and Europe. The twelve economic and legal specialists of this volume seek to explain why firms organized along the shareholder model have not outperformed other forms of ownership. Answers lie in the historical and institutional background of each country.

Chapter 2: Ownership Concentration, Employment Protection and Macroeconomic Performance: Making a Case for Interdependent Time-evolving Institutions

Donatella Gatti

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


Donatella Gatti INTRODUCTION This chapter aims at analysing the macroeconomic impact of ownership structure and employment protection by taking into account their interdependencies and changes over time. Two streams of literature deal separately with these issues. On the one hand, there is a wide consensus in economics about the crucial role of institutions in determining crosscountry economic performances. On the other hand, a large body of literature within political economy and political science shows that the roots of institutional diversity are to be found in political, institutional and economic factors. Approaches from these two streams of literature rarely come together. At the cross-border of economics, political economy and political science, two frontier issues are emerging: first, the question of interdependencies across existing institutional devices, and second the endogenous evolution of those institutional arrangements. A multidisciplinary approach – bringing together separate fields, such as economics, political economy and political science – is needed to account for interdependent time-evolving institutional arrangements. In order to take interdependencies seriously, a framework is needed, where the economic impact of institutions depends not only on history, but also on context(s). The issue of time-evolving institutions raises the question of feedbacks from economic performance onto pre-existing institutional arrangements, and their subsequent transformations. This calls for moving away from static approaches based on assessing the economic impact of (almost) fixed exogenous institutions. In this chapter, I shall address empirically the question of measuring interdependencies and accounting 49 50 Does company ownership matter? for endogeneity. I shall rely on advances...

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