IDEAS home Printed from https://ideas.repec.org/p/wai/econwp/06-07.html
   My bibliography  Save this paper

Path Dependence or Convergence? The Evolution of Corporate Ownership Around the World

Author

Listed:
  • Andrew J.Y. Yeh

    () (Reserve Bank of New Zealand)

  • Steven Lim

    (University of Waikato)

  • Ed Vos

    (University of Waikato)

Abstract

We offer a theory that sheds light on the current debate over whether the form of corporate ownership converges to the Berle-Means image. Our analytical results are threefold. First, legal rules and firm-specific protective arrangements are complementary. Secondly, corporate ownership patterns can be convergent or path dependent depending on the relative importance of these protective arrangements. We predict, for example, diffuse stock ownership in countries that impose legal limits on blockholders’ power to expropriate minority investor rights. Thirdly, we find that convergence toward diffuse share ownership is a movement towards the social optimum. Our empirical results suggest a case for the co-existence of path dependence and functional convergence (convergence to the diffuse form of share ownership through cross-listings on U.S. stock exchanges that impose more stringent disclosure and listing requirements). These results have implications for the design of executive compensation, the case for institutional investor activism and the proposal to increase shareholder power.

Suggested Citation

  • Andrew J.Y. Yeh & Steven Lim & Ed Vos, 2006. "Path Dependence or Convergence? The Evolution of Corporate Ownership Around the World," Working Papers in Economics 06/07, University of Waikato.
  • Handle: RePEc:wai:econwp:06/07
    as

    Download full text from publisher

    File URL: ftp://wms-webprod1.mngt.waikato.ac.nz/RePEc/wai/econwp/0607.pdf
    Download Restriction: no

    Other versions of this item:

    More about this item

    Keywords

    corporate governance; ownership concentration; institutions; quality of governance; path dependence; functional convergence;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wai:econwp:06/07. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Brian Silverstone). General contact details of provider: http://edirc.repec.org/data/dewaknz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.