- The Cournot Centre series
Edited by Jean-Philippe Touffut
Chapter 1: Ownership, Corporate Governance, Specialization and Performance: Interpreting Recent Evidence for OECD Countries
1. Ownership, corporate governance, specialization and performance: interpreting recent evidence for OECD countries1 Wendy Carlin INTRODUCTION Firms, and societies, organized along the standard shareholder-oriented model seem[ed] to be outcompeting those that were organized differently. (Hansmann, 2006, p. 747) There has been a great deal of activity in introducing shareholder-oriented changes to corporate governance codes and regulation across OECD economies over the past two decades (Goergen et al., 2005; Enriques and Volpin, 2007). The surrounding debate has been based on the standard definition of corporate governance as the system by which companies are controlled in order that suppliers of finance can be assured of getting a return on their investments (see, for example, Shleifer and Vishny, 1997; see also Tirole, 2005, Chapter 1). The motivation for the reforms is nicely summarized in Henry Hansmann and Reinier Kraakman’s well-known paper, ‘The end of history for corporate law’, published in 2001.2 The first claim is that the ideological or normative battle is over and that there is near universal agreement across the world that the best form of organization for large firms is the standard shareholder-oriented model with earnings and control rights allocated using a single class of shares. The second claim is that this form of organization is the most efficient one, and the third is that practice and law are converging on this model. In short, it is claimed that publicly traded firms of the standard type will continue to be ‘society’s dominant producers of goods and services’ (Hansmann, 2006,...
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