Research Handbooks in Law and Economics series
Edited by Thomas Eger and Hans-Bernd Schäfer
Chapter 8: Corporate Governance in Europe: Foundations, Developments and Perspectives
Patrick C. Leyens 1 FOUNDATIONS OF CORPORATE GOVERNANCE IN EUROPE Corporate governance in Europe looks back on a long history. From the beginnings of corporate law the owners of stock corporations experienced what became known through Berle and Means in 1932 as the problem of separation of ownership and control.1 Already the governance problems of the Dutch East India Company,2 founded in 1602 as the first listed company in Europe, had led to the installation of an early form of a supervisory board.3 In the second half of the 20th century corporate governance became a research discipline of its own. Its core question concerns the relative importance of factors which influence managerial behaviour and align it to the interests of shareholders or stakeholders.4 A truly international and increasingly interdisciplinary debate has detected the building blocks of corporate governance inside and outside the company:5 the board, labour, financial intermediaries, capital markets and corporate finance, disclosure and information intermediaries as well as lenders.6 The perhaps most important finding is that the relative importance of these building blocks needs to be determined according to path dependencies, which include legal as well as socio-economic factors.7 The European Action Plan 2003 on the modernisation of company law and enhancement of corporate governance8 illustrates that corporate governance has become a key 1 A. Berle and G. Means, The Modern Corporation and Private Property, New Brunswick, 1991 (reprint 1st edn, 1932). On the separation of ownership and control cf. also E.F. Fama and M.C. Jensen,...
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