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The History and Politics of Corporate Ownership in Sweden

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  • Peter Hogfeldt

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.

Suggested Citation

  • Peter Hogfeldt, 2004. "The History and Politics of Corporate Ownership in Sweden," NBER Working Papers 10641, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10641
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Randall Morck, 2005. "How to Eliminate Pyramidal Business Groups The Double Taxation of Inter-corporate Dividends and other Incisive Uses of Tax Policy," NBER Chapters,in: Tax Policy and the Economy, Volume 19, pages 135-179 National Bureau of Economic Research, Inc.
    3. 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.
    4. Perotti, Enrico & Schwienbacher, Armin, 2009. "The political origin of pension funding," Journal of Financial Intermediation, Elsevier, vol. 18(3), pages 384-404, July.
    5. Sergei Guriev & Andrei Rachinsky, 2004. "Ownership concentration in Russian industry," Working Papers w0045, Center for Economic and Financial Research (CEFIR).
    6. Sergei Guriev & Andrei Rachinsky, 2005. "The Role of Oligarchs in Russian Capitalism," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 131-150, Winter.
    7. Bjuggren, Per-Olof & Eklund, Johan & Wiberg, Daniel, 2008. "Institutional Ownership and the Returns on Investment," Ratio Working Papers 128, The Ratio Institute.
    8. Eklund, Johan E, 2009. "One Share – One Vote: new evidence from the Nordic countries," Working Paper Series in Economics and Institutions of Innovation 168, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    9. Johan E. Eklund, 2009. "Corporate Governance and Investments in Scandinavia – Ownership Concentration and Dual-Class Equity Structure," Chapters,in: The Modern Firm, Corporate Governance and Investment, chapter 7 Edward Elgar Publishing.
    10. Mehar, Ayub, 2008. "Is there a Vicious circle in Muslim World? Trade competitiveness and investment strategies," MPRA Paper 11284, University Library of Munich, Germany.
    11. Rida Zaidi & Ahmad Aslam, 2006. "Managerial Efficiency in Family Owned Firms in Pakistan - An Examination of Listed Firms," Microeconomics Working Papers 22283, East Asian Bureau of Economic Research.
    12. 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.

    More about this item

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • N2 - Economic History - - Financial Markets and Institutions

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