Politics-Business Interaction PathsMarianna Belloc and Ugo Pagano () No 109, Working Papers from Sapienza University of Rome, Department of Public Economics Abstract: Countries characterized by strong workers’ political rights tend to exhibit a strong and concentrated corporate ownership structure. One explanation is that employees' political rights influence corporate governance: systems characterised by strong employees' rights tend to be balanced by strong and concentrated owners. In this approach, the separation between ownership and control is only possible when unions and social democratic parties are sufficiently weak. In this paper we argue that causation runs also in the opposite direction (from strong concentrated ownership to strong employees' protection) and leads to multiple equilibria characterized by alternative interaction paths of Politics and Corporate Governance. To empirically assess our theoretical arguments, we run Bayesian simultaneous equation estimation and perform Bayesian model comparison of the various theories for employment protection determination. We obtain that the concentration model is more likely than other models in the determination of employment protection. We conclude by exploring economic policy implications. Keywords: employment protection; corporate governance; ownership concentration; Bayesian modelì estimation; Bayesian model comparison. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:sap:wpaper:109 Access Statistics for this paper More papers in Working Papers from Sapienza University of Rome, Department of Public Economics |
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