(Routledge Studies in the European Economy) [Peter Cressey, Bryn Jones] on Europe's work force is subject to a dual convergence process: from the. Editorial Reviews. About the Author. Peter Cressey and Bryan Jones are both Senior Lecturers Europe: A New Convergence? (Routledge Studies in the European Economy Book 2) - Kindle edition by Peter Cressey, Bryn Jones. Download.
A more realistic perspective than the convergence thesis is a more nuanced understanding that despite the financial and other market pressures towards convergence there will continue to be considerable diversity in the forms of corporate governance developing around the world. Different traditions, values and objectives will undoubtedly continue to produce different outcomes in governance, which will relate closely to the choices and preferences people exercise in engaging in business activity.
If there is convergence of corporate governance, it could be to a variety of different forms, and it is likely there will be divergence away from the shareholder oriented Anglo-American model, as there will be convergence towards it. There is a growing realisation that shareholder value is a debilitating ideology which is undermining corporations with an over-simplification of complex business reality, weakening managers, corporations and economies, and ignoring the diversity of investment institutions and interests Clarke, ; Clarke, ; Lazonick, In the contest between three resolutely different approaches to corporate governance in the Anglo-American, European and Asia-Pacific models, the question arises: is one system more robust than the others and will this system prevail and become universal?
The answer to this question appeared straightforward in the s.
www.cantinesanpancrazio.it/components/kywysike/866-copiare-rubrica-da.php The US economy was ascendant, and the American market-based approach appeared the most dynamic and successful. Functional convergence towards the market-based system seemed to be occurring inexorably driven by forces such as:. Together these forces have provoked one of the liveliest debates of the last two decades concerning the globalisation and convergence of corporate governance Roe, ; Hansmann and Kraakman, ; Branson, ; McDonnell, ; McCahery et al.
As functional convergence proceeds in the way corporate access to finance and governance practices become universal, it is assumed that institutional convergence of legal and regulatory bodies, and governance institutions will become identical. How high the stakes are in this debate is revealed by Gordon and Roe:. Globalization affects the corporate governance reform agenda in two ways. First, it heightens anxiety over whether particular corporate governance systems confer competitive economic advantage.
As trade barriers erode, the locally protected product marketplace disappears. Poor performance shows up more quickly when a competitor takes away market share, or innovates quickly. National decision makers must consider whether to protect locally favored corporate governance regimes if they regard the local regime as weakening local firms in product markets or capital markets. Concern about comparative economic performance induces concern about corporate governance. They prefer a corporate governance regime they understand and often believe that reform will increase the value of their stock.
Similarly, even local investors may make demands that upset a prior local consensus. The internationalization of capital markets means that investment flows may move against firms perceived to have suboptimal governance and thus to the disadvantage of the countries in which those firms are based. In the inevitable contest between the insider, relationship-based, stakeholder-oriented corporate governance system and the outsider, market- based, shareholder value-oriented system, it is often implied that the optimal model is the dispersed ownership with shareholder foci for achieving competitiveness and enhancing any economy in a globalised world.
The OECD, World Bank, IMF, Asian Development Bank and other international agencies, while they have recognised the existence of different governance systems and suggested they would not wish to adopt a one-size-fits-all approach, have nonetheless consistently associated the rules-based outsider mode of corporate governance with greater efficiency and capacity to attract investment capital, and relegated the relationship-based insider mode to second best, often with the implication that these systems may be irreparably flawed.
The drive towards functional convergence was supported by the development of increasing numbers of international codes and standards of corporate governance. The vast weight of scholarship, led by the financial economists, has reinforced these ideas to the point where they appeared unassailable at the height of the new economy boom in the US in the s which coincided with a long recession for both the leading exponents of the relationship-based system, Japan and Germany , supporting the view that an inevitable convergence towards the superior Anglo-American model of corporate governance was occurring.
This all appeared an integral part of the irresistible rise of globalisation and financialisation that was advancing through the regions of the world in the late s and early s, with apparently unstoppable force. Economies, cultures and peoples increasingly were becoming integrated into global markets, media networks, and foreign ideologies in a way never before experienced. It seemed as if distinctive and valued regional patterns of corporative governance would be absorbed just as completely as other cultural institutions in the integrative and homogenising processes of globalisation.
The increasing power of global capital markets, stock exchanges, institutional investors, and international regulation would overwhelm cultural and institutional differences in the approach to corporate governance. Yet just as there are many countries that continue to value greatly the distinctions of their culture and institutions they would not wish to lose to any globalised world, people also believe there are unique attributes to the different corporate governance systems they have developed over time, and are not convinced these should be sacrificed to some unquestioning acceptance that a universal system will inevitably be better.
The field of comparative corporate governance has continued to develop however, and a different and more complex picture of governance systems is now emerging.
The objectives of corporate governance are more closely questioned; the qualities of the variety and relationships of different institutional structures are becoming more apparent; the capability and performance of the different systems more closely examined; and different potential outcomes of any convergence of governance systems realised.
While capital markets have acquired an apparently irresistible force in the world economy, it still appears that institutional complementarities at the national and regional level represent immovable objects Jacoby, ; Deeg and Jackson, ; Williams and Zumbansen, ; Jackson and Deeg, ; Clarke, ; Clarke a. This is not to argue the immutability of institutions which of course are continuously engaged in complex processes of creation, development and reinvention in the economic, social and cultural context in which they exist.
However, what is at issue is the causation and direction of these institutional changes. From the convergence perspective they are a logical result of adopting the superior Anglo-American institutions of corporate governance and financial markets. From the perspective of those who respect and understand the reasons for institutional diversity and value the outcomes of this diversity, institutional change is a more autonomous process embedded within economies and societies, which may indeed have to negotiate some settlement with international market forces, but strive to do so while maintaining their own values.
Coffee argues that while the law matters, legal reforms follow rather than lead market changes.
Coffee, 6. Texto integral PDF Assinalar este documento. Egypt also imported coal from overseas, at similar prices to what imported coal cost in France, until the s, when Cairo gained access to coal sources in Lebanon , which had a yearly coal output of 4, tons. The US economy was ascendant, and the American market-based approach appeared the most dynamic and successful. History and politics reminds us of the relation of distinctive institutional developments to the timing of industrialisation, the relative autonomy of states in regulating property and competition, and the significance of the structure and distribution of power and elites. A major driver of the globalisation phenomenon has proved the massive development of finance markets, and their increasing influence upon every other aspect of the economy: Financial globalisation, i.
Gilson 10 offers a more robust view of the force of functional convergence:. Path dependency, however, is not the only force influencing the shape of corporate governance institutions. Existing institutions are subject to powerful environmental selection mechanisms.
If existing institutions cannot compete with differently organized competitors, ultimately they will not survive. Path dependent formal characteristics of national governance institutions confront the discipline of the operative selection mechanisms that encourage functional convergence to the more efficient structure and, failing that, formal convergence as well. While more viable illustrations of functional convergence could readily be found, it could be argued that this approach is largely another route to the convergence thesis rather than an alternative.
Indeed, functional convergence, since it is easier to achieve than institutional convergence, could prove a quicker route to shareholder value orientations. The convergence thesis is derived essentially from the globalisation thesis: that irresistible market forces are impelling the integration of economies and societies. Globalisation represents a profound reconfiguration of the world economy compared to earlier periods of internationalization. A major driver of the globalisation phenomenon has proved the massive development of finance markets, and their increasing influence upon every other aspect of the economy:.
Financial globalisation, i. From the s on, the increase in cross-border holdings of assets outpaced the increase in international trade, and financial integration accelerated once more in the s… The past decade has also seen widespread improvements in macroeconomic and structural policies that may to some extent be linked to a disciplining effect of financial integration.
Moreover, there is evidence that financial linkages have strengthened the transmission of cyclical impulses and shocks among industrial countries. Financial globalisation is also likely to have helped the build-up of significant global current account imbalances. Finally, a great deal of the public and academic discussion has focussed on the series of financial crises in the s, which has highlighted the potential effects of capital account liberalisation on the volatility of growth and consumption.
European Commission, The complex explanation for this massive financialisation of the world economy is pieced together by Ronald Dore thus:.
What is resulting from this insistent impulse of the increasingly dominant financial institutions are economies and corporations increasingly dependent upon financial markets:. Global integration and economic performance has been fostered by a new dynamic in financial markets, which both mirrors and amplifies the effects of foreign direct investment and trade driven integration.
Financial innovations and financial cycles have periodically impacted substantially on economies and societies, most notably in the recent global financial crisis Rajan, ; Clarke, a. However the new global era of financialisation is qualitatively different from earlier regimes. Global finance is now typified by a more international, integrated and intensive mode of accumulation, a new business imperative of the maximisation of shareholder value, and a remarkable capacity to become an intermediary in every aspect of daily life van der Zwan, Hence finance as a phenomenon today is more universal, aggressive and pervasive than ever before Krippner, ; ; Epstein, ; ; Dore, ; Davis, ; van der Zwan, These financial pressures are translated into the operations of corporations through the enveloping regime of maximising shareholder value as the primary objective.
Agency theory has provided the rationale for this project, prioritizing shareholders above all other participants in the corporation, and focusing corporate managers on the release of shareholder value incentivized by their own stock options. In turn this leads to an obsessive emphasis on financial performance measures, with increasingly short term business horizons Lazonick, ; ; Clarke, ; Clarke, A vital dimension of the increasing financialisation of the world economy is the growth of capital markets, and especially the vast growth of equity markets, where volatility has been experienced at its furthest extremities.
What this demonstrates is the overwhelming predominance of Anglo-American institutions and activity in world equity markets, and how to a great extent these markets reflect largely Anglo-American interests, as the rest of the world depends more on other sources of corporate finance. This pre-eminence of equity markets is a very recent phenomenon. Historically, the primary way most businesses throughout the world including in the Anglo-American region have financed the growth of their companies is internally through retained earnings.
In most parts of the world until recently, this was a far more dependable source of capital rather then relying on equity markets. Equity finance has proved useful at the time of public listing when entrepreneurs and venture capitalists cash in their original investment, as a means of acquiring other companies, or providing rewards for executives through stock options.
Equity finance is used much less frequently during restructuring or to finance new product or project development Lazonick, In Europe and the Asia-Pacific however, this capital was in the past provided by majority shareholders, banks, or other related companies to the extent it was needed by companies committed to organic growth rather than through acquisition, and where executives traditionally were content with more modest personal material rewards than their American counterparts.
The euphoria of the US equity markets did reach across the Atlantic with a flurry of new listings, which formed part of a sustained growth in the market capitalisation of European stock exchanges as a percentage of GDP. A keen attraction of equity markets for ambitious companies is the possibility of using shares in equity swaps as a means of taking over other companies thus fuelling the take-over markets of Europe.
This substantial development of the equity markets of France, the Netherlands, Germany, Spain, and Belgium and other countries began to influence the corporate landscape of Europe, and was further propelled by the formation of Euronext, and the subsequent merger with the NYSE.
Indeed, as the regulatory implications of Sarbanes Oxley emerged in the United States from onwards, the market for IPOs moved emphatically towards London, Hong Kong and other exchanges. Though the US total share of global stock market activity remained at 50 per cent in , the IPO activity had collapsed. The more relaxed regulatory environment of the UK and other jurisdictions clearly for a time at least proved attractive in an ongoing process of international regulatory arbitrage.
Any such mergers represent a further US bridgehead into the equity markets of Europe, rather than the converse. Along with the growth in market capitalisation in European exchanges occurred a gradual increase also in trading value.
It appears that contemporary equity markets inevitably will be associated with high levels of trading activity, as a growing proportion of trading is algorithmic high frequency computer generated. Following the global financial crisis, regulatory intervention in finance was perceived to be more robust in Europe and the UK, and less so in the United States with the slow pace of the introduction of the monumental Dodd-Frank Act.
In this context the attractions of the New York Stock Exchange and Nasdaq returned, and by reached once again the levels of IPO financing in the dot-com s era, far exceeding the amounts raised in the London and Hong Kong markets combined Financial Times, 29 September As equity markets come to play a more powerful role in corporate life in Europe, Japan and other parts of the world, a set of assumptions and practices are also disseminated which may confront long standing values and ideals in the economies and societies concerned.
Specifically, the ascendancy of shareholder value as the single legitimate objective of corporations and their executives, usually accompanies increasing dependence upon equity markets.
Dore cites a Goldman Sachs study of manufacturing value added in the United States, Germany and Europe in general, which concluded that:. The share of gross value added going to wages and salaries has declined on trend in the US since the early s. In fact, for the US, this appears to be an extension of a trend that has been in place since the early s… We believe that the pressures of competition for the returns on capital available in the emerging economies have forced US industry to produce higher returns on equity capital and that their response to this has been to reserve an increasingly large share of output for the owners of capital.
Young, Multiple voices are urging Japanese managers to go in the same direction. The transformation on the agenda may be variously described — from employee sovereignty to shareholder sovereignty: from the employee-favouring firm to the shareholder-favouring firm; from pseudo-capitalism to genuine capitalism.
They all mean the same thing: the transformation of firms run primarily for the benefits of their employees into firms run primarily, even exclusively, for the benefit of their shareholders… It means an economy centred on the stock market as the measure of corporate success and on the stock market index as a measure of national well-being, as opposed to an economy which has other, better, more pluralistic criteria of human welfare for measuring progress towards the good society. However part of the price of restoring confidence to the markets was the hasty passage of the Sarbanes Oxley legislation and increased regulation of corporate governance.
Yet Sarbanes Oxley apparently did little to curb the animal spirits of some fringes of the US financial institutions that ultimately impacted on the world economy. Nonetheless despite the strenuous intervention of the G20, Financial Stability Board internationally and the Dodd-Frank legislation in the US intended to restrain the most dangerous impulses of financial institutions, the strength and vigour of capital markets seems destined to continue to advance globally without adequate regulation or oversight Clarke and Klettner, ; Avgouleas, While each of the regional systems of finance and corporate governance remains in the post-financial crisis period weakened and to a degree disoriented, the substance and rhythm of institutional varieties continues: in Germany there remains an incomplete form of market liberalization, and resilient elements of the social market economy Jackson and Sorge, ; in France, while the neo-liberal reforms have undermined social alliances and the pressures for institutional change increase, social commitments continue Amable et al.
Despite the recurrent crises originating in Anglo-American finance and governance in this period, and in the background the continuing reverberations of the global financial crisis, the confidence the market based system was the only way forward has continued almost undaunted in government and business circles, certainly in the Anglo-American world Clarke, a. Underlying the resurging energy of advancing equity markets and the proliferating corporate governance guidelines and policy documents appearing in such profusion over the last two decades is an implicit but confident sense that an optimal corporate governance model is indeed emerging:.
An optimal model with dispersed ownership and shareholder foci… The OECD and World Bank promote corporate governance reform… Influenced by financial economists and are generally promoting market capitalism with a law matters approach, although for political reasons, they do not advocate too strongly market capitalism and allow for other corporate governance systems i.
Pinto, Other authorities are less diplomatic in announcing the superiority of the Anglo-American approach that other systems must inevitably converge towards. Two US eminent law school professors Hansmann and Kraakman in an article prophetically entitled The end of history for corporate law led the charge of the convergence determinists:. Despite very real differences in the corporate systems, the deeper tendency is towards convergence, as it has been since the nineteenth century. The core legal features of the corporate form were already well established in advanced jurisdictions one hundred years ago, at the turn of the twentieth century.
Although there remained considerable room for variation in governance practices and in the fine structure of corporate law throughout the twentieth century, the pressures for further convergence are now rapidly growing.