EconPapers    
Economics at your fingertips  
 

Corporate Governance Reforms in Continental Europe

Luca Enriques and Paolo Volpin

Journal of Economic Perspectives, 2007, vol. 21, issue 1, 117-140

Abstract: The fundamental problem of corporate governance in the United States is to alleviate the conflict of interest between dispersed small shareowners and powerful controlling managers. The fundamental corporate governance in continental Europe and in most of the rest of the world is different. There, few listed companies are widely held. Instead, the typical firm in stock exchanges around the world has a dominant shareholder, usually an individual or a family, who controls the majority of the votes. In this essay, we begin by describing the differences in the ownership structure of companies in the three main economies of continental Europe -- Germany, France, and Italy -- with comparisons to the United States and the United Kingdom. We next summarize the corporate governance issues that arise in firms with a dominant shareholder. We take a look at a major European corporate scandal, Parmalat, as an extreme example of investor expropriation in a family-controlled corporation. We outline the legal tools that can be used to tackle abuses by controlling shareholders. Finally, we describe the corporate governance reforms enacted by France, Germany, and Italy between 1991 and 2005 and assess the way in which investor protection in the three countries has changed.

Date: 2007
Note: DOI: 10.1257/jep.21.1.117
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (77) Track citations by RSS feed

Downloads: (external link)
http://www.aeaweb.org/articles.php?doi=10.1257/jep.21.1.117 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aea:jecper:v:21:y:2007:i:1:p:117-140

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

Journal of Economic Perspectives is currently edited by Enrico Moretti

More articles in Journal of Economic Perspectives from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().

 
Page updated 2019-11-30
Handle: RePEc:aea:jecper:v:21:y:2007:i:1:p:117-140