Political Power and Corporate Control: The New Global Politics of Corporate Governance

Political Power and Corporate Control: The New Global Politics of Corporate Governance

by Peter A. Gourevitch, James Shinn
     
 

ISBN-10: 0691133816

ISBN-13: 9780691133812

Pub. Date: 07/16/2007

Publisher: Princeton University Press

Why does corporate governance—front page news with the collapse of Enron, WorldCom, and Parmalat—vary so dramatically around the world? This book explains how politics shapes corporate governance—how managers, shareholders, and workers jockey for advantage in setting the rules by which companies are run, and for whom they are run. It combines a clear

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Overview

Why does corporate governance—front page news with the collapse of Enron, WorldCom, and Parmalat—vary so dramatically around the world? This book explains how politics shapes corporate governance—how managers, shareholders, and workers jockey for advantage in setting the rules by which companies are run, and for whom they are run. It combines a clear theoretical model on this political interaction, with statistical evidence from thirty-nine countries of Europe, Asia, Africa, and North and South America and detailed narratives of country cases.

This book differs sharply from most treatments by explaining differences in minority shareholder protections and ownership concentration among countries in terms of the interaction of economic preferences and political institutions. It explores in particular the crucial role of pension plans and financial intermediaries in shaping political preferences for different rules of corporate governance. The countries examined sort into two distinct groups: diffuse shareholding by external investors who pick a board that monitors the managers, and concentrated blockholding by insiders who monitor managers directly. Examining the political coalitions that form among or across management, owners, and workers, the authors find that certain coalitions encourage policies that promote diffuse shareholding, while other coalitions yield blockholding-oriented policies. Political institutions influence the probability of one coalition defeating another.

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Product Details

ISBN-13:
9780691133812
Publisher:
Princeton University Press
Publication date:
07/16/2007
Pages:
368
Product dimensions:
6.10(w) x 9.10(h) x 0.90(d)

Table of Contents

LIST OF ABBREVIATIONS vii

PREFACE xiii

CHAPTER ONE: Introduction and Summary Argument 1

Why Fight about Corporate Governance? 3

Great Variance and the "Great Reversals" 4

Putting the Pieces Together: In Search of a Political Explanation 10

Policy Consequences 12

Plan of Attack 14

CHAPTER TWO: Governance Patterns: What Causes What? 15

Outcomes: Dependent Variables and Patterns of Control 16

Capitalist Economic Policies, Minority Shareholder Protections, and Degrees of Coordination 20

Politics: Preferences and Institutions 22

Conclusion 26

CHAPTER THREE: Framing Incentives: The Economics and Law Tradition 27

Origins of the Debate 28

Incomplete Contracts and Private Order 30

Law and Regulation: Minority Shareholder Protections—Information, Oversight, Control, and Incentives 39

Varieties of Capitalism: Degrees of Coordination in Market Economies 51

Conclusion 55

CHAPTER FOUR: Politics: Preferences and Institutions 57

Mapping Financial Interests on Political Processes: A Causal Model 57

Preferences and Coalitions among Owners, Managers, and Workers 59

Political Institutions: Majoritarian and Consensus Mechanisms 67

Alternative Arguments: Legal Family and Economic Sociology 83

Conclusion 93

CHAPTER FIVE: Preference Cleavages 1: Class Conflict 95

Section 1: Owners and Managers Dominate Workers 96

The Investor Model 96

Analytic Narrative 123

Korea: Changing Institutions, Shifting Preferences 123

Section 2: Workers Dominate Owners and Managers 132

The Labor Power Model 132

Analytic Narrative 140

Sweden: The Exemplar of the Labor Power Model? 140

Conclusion 147

CHAPTER SIX: Preference Cleavages 2: Sectoral Conflict 149

Section 1: Cross-Class Coalitions 149

The Corporatist Model: Workers and Managers Dominate Owners 150

Analytic Narrative 159

Germany: From Corporatist Bargain to a Transparency Coalition 160

Japan: Concentration without Owners 167

The Netherlands: The Evolution of "Poldermodel" Corporatism 177

Section 2: Building Coalitions in Authoritarian Systems 187

The Oligarchy Model: Owners Dominate Workers and Managers 187

Analytic Narratives 189

Russia: Oligarchs and Politics 190

China: "Selectorate-Electorate" Coalition 192

Singapore: Shareholder Protections with "Guided" Democracy 199

Conclusion 203

CHAPTER SEVEN: Preference Cleavages 3: Transparency, Voice, and Pensions 205

Section 1: Workers and Owners Dominate Managers 205

From Class Conflict to Corporatist Compromise 206

Analytic Narratives 228

Chile: Authoritarian Roots of the Transparency Coalition 228

Malaysia: Ethnicity and Democracy in Governance Politics 232

Section 2: Managers Dominate Owners and Workers 237

"Managerism" 237

Analytic Narratives 241

The United States: A Contested Path from Oligarchy to MSP 241

United Kingdom: The Power of Majoritarian Political Institutions? 259

France: Without the State, Who Is in Control? 262

Conclusion 273

CHAPTER EIGHT: Conclusion: Going Forward 277

Questions and Answers: What Explains Variance? 277

Shortcomings and Guideposts for Future Research 285

Conclusion: Fighting over the Governance Debate 287

DATA APPENDIX 297

BIBLIOGRAPHY 313

INDEX 333

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