Joseph A. McCahery (Tilburg University – School of Law; European Banking Center (EBC) ; European Corporate Governance Institute (ECGI) ; Duisenberg School of Finance ; Tilburg Law and Economics Center (TILEC) and Erik P. M. Vermeulen (Tilburg University – Department of Business Law ; Philips International BV ; Tilburg Law and Economics Center (TILEC) ; Kyushu University – Faculty of Law) have published “The ‘Ignored’ Third Dimension of Corporate Governance“, Lex Research Topics in Corporate Law & Economics Working Paper No. 2014-1.
The abstract is as follows:
The separation of ownership and control has always been central in corporate governance debates. A large body of literature has sought to show that control-enhancing arrangements can deter investors. However, the experience of the last few years has suggested that companies with widely dispersed ownership can suffer from their own issues – not least short-termism. So, is ownership structure really the dividing line between ‘good’ and ‘bad’ governance that many commentators suggest? This short essay suggests that policymakers, academics and practitioners should be careful in deriving conclusions about the most effective ownership and control structures. Ownership is firm-specific and varies across life cycle stages, sectors, regions, countries and cultures. Ownership structures are also dynamic in that they (should) change over time according to evolving markets and shifting business strategies and practices.