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The History and Politics of Corporate Ownership in Sweden

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  • Peter Hogfeldt
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    Abstract

    Not despite but because of persistent Social Democratic political influence since the Great Reversal in 1932 have a few families and banks controlled the largest listed firms in Sweden. The Social Democrats have de facto been the guarantor rather than the terminator of private capitalism since the political and corporate incumbencies have been united by strong common interests. Incumbent owners need the political support to legitimize that their corporate power rests on extensive use of dual-class shares and pyramiding. While the Social Democrats only get the necessary resources and indirect support for their social and economic policies from the private sector if the largest firms remain under Swedish control so that capital does not migrate. The extensive use of mechanisms to separate votes from capital however drives a significant wedge between the costs of internal and external capital that causes an enhanced (political) pecking order of financing where new external equity is strongly avoided. By not encouraging outsiders to create new firms and fortunes, and by not fully activating the primary equity markets, the heavy politicized system has redistributed incomes but not property rights and wealth. The result is an ageing economy with an unusually large proportion of very old and very large firms with well-defined owners in control. 31 of the 50 largest listed firms in 2000 were founded before 1914, only 8 in the post-war period and none after 1970.

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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10641.

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    Date of creation: Jul 2004
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    Publication status: published as Peter Hogfeldt. "The History and Politics of Corporate Ownership in Sweden," in Randall K. Morck, editor, "A History of Corporate Governance around the World: Family Business Groups to Professional Managers" University of Chicago Press (2005)
    Handle: RePEc:nbr:nberwo:10641

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    Cited by:
    1. Bjuggren, Per-Olof & Eklund, Johan E. & Wiberg, Daniel, 2007. "Institutional Owners and the Return on Investments," Working Paper Series in Economics and Institutions of Innovation 96, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    2. Mehar, Ayub, 2008. "Is there a Vicious circle in Muslim World? Trade competitiveness and investment strategies," MPRA Paper 11284, University Library of Munich, Germany.
    3. Haaparanta, Pertti & Juurikkala, Tuuli & Lazareva, Olga & Pirttilä, Jukka & Solanko, Laura & Zhuravskaya, Ekaterina, 2003. "Firms and public service provision in Russia," BOFIT Discussion Papers 16/2003, Bank of Finland, Institute for Economies in Transition.
    4. Bjuggren, Per-Olof & Eklund, Johan & Wiberg, Daniel, 2008. "Institutional Ownership and the Returns on Investment," Ratio Working Papers 128, The Ratio Institute.
    5. Perotti, Enrico C & Schwienbacher, Armin, 2007. "The Political Origin of Pension Funding," CEPR Discussion Papers 6100, C.E.P.R. Discussion Papers.
    6. Morck, Randall, 2006. "How to Eliminate Pyramidal Business Groups: The Double Taxation of Inter-corporate Dividends and other Incisive Uses of Tax Policy," CEI Working Paper Series 2005-15, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    7. Peter Hogfeldt, 2005. "The History and Politics of Corporate Ownership in Sweden," NBER Chapters, in: A History of Corporate Governance around the World: Family Business Groups to Professional Managers, pages 517-580 National Bureau of Economic Research, Inc.
    8. Sergei Guriev & Andrei Rachinsky, 2004. "Ownership concentration in Russian industry," Working Papers w0045, Center for Economic and Financial Research (CEFIR).

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