The Swedish Model of Corporate Ownership and Control in Transition

Magnus Henrekson () and Ulf Jakobsson ()
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Ulf Jakobsson: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

No 593, Working Paper Series from Research Institute of Industrial Economics

Abstract: We analyze the development of the Swedish ownership model after World War II. The controlling ownership in Swedish firms is typically concentrated to one or two owners. Often, but not always, the controlling owners are Swedish families. Thus, the model resembles the typical corporate control model of Continental Europe. A distinguishing feature of the Swedish model is that control is typically based on a smaller capital base than in other European countries. This feature is a result of a seemingly paradoxical policy concerning private ownership. Tax policy has consistently disfavored the accumulation of private wealth, but at the same time corporate law has greatly facilitated the wielding of control based on a small equity base. Our analysis shows that the large gap between ownership and control makes the Swedish corporate control model both politically and economically unstable. The major political threat to date has been the proposal of the Swedish Trade Union Congress (the LO) and the Social Democratic Party to introduce a scheme that would result in the gradual takeover of the Swedish corporate sector by union-controlled wage-earner funds. After the political defeat of this proposal in the 1980’s economic policy was changed in a more market liberal direction. This policy change has uncovered the economic instability of the model. The weak financial base of the controlling owners makes it difficult for them to take an active part in the current international restructuring of the corporate sector. Two forces are now seen as the major threat to the Swedish ownership model: (a) a rapidly increasing foreign takeover of Swedish firms and (b) large state and corporatist pension funds. Their financial assets are far larger than those of today’s dominant control owners and extensive mandatory and/or tax-favored systems for pensions saving ascertain that their relative financial strength will continue to grow sharply in the future.

Keywords: Corporate control; Corporate governance; Corporatism; Entrepreneurship; Ownership policy; Ownership structure; Swedish Model (search for similar items in EconPapers)
JEL-codes: M13 N24 O38 P16 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2003-04-15
New Economics Papers: this item is included in nep-eec
Note: This paper was presented at the conference Who will own Europe? The internationalization of asset ownership in the EU today and in the future, arranged by the European Commission (DGECFIN), Brussels, February 27-28, 2003.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Who Will Own Europe? The Internationalisation of Asset Ownership in Europe, Huizinga, Harry, Jonung, Lars (eds.), 2005, pages 207-246, Cambridge University Press.

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Working Paper: The Swedish Model of Corporate Ownership and Control in Transition (2003)
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