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Institutional Investors in French and German Corporate Governance: The Transformation of Corporate Governance and the Stability of Coordination. CES Germany & Europe Working Paper, no.07.2, 2008

Goyer, Michel. (2007) Institutional Investors in French and German Corporate Governance: The Transformation of Corporate Governance and the Stability of Coordination. CES Germany & Europe Working Paper, no.07.2, 2008. [Working Paper]

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    Abstract

    This paper examines the transformation of the system of corporate governance of France and Germany from the mid-1990s to early 2007. I focus on the rise of foreign ownership as a key in-dicator of shifts in corporate governance. The empirical data presented in this paper on the in-vestment portfolios of short-term institutional investors, namely actively managed mutual funds, shows a marked preference for the French market over that of Germany. The case of American and British-based hedge funds serves as a supporting comparative case study. I argue that the firm-level institutional arrangements of workplace organization constitute the most significant variable to account for this difference – the concentration of power in top executives in France fitting better with the preferences and investment strategies of short-term oriented institutional investors. I do not want to suggest that the institutional characteristics of workplace organization constitute the only investment driver of actively managed mutual funds. I also analyze the shortcomings of three alternative co-varying explanations – degree of internationalization, own-ership structure of companies, and background of corporate executives. I demonstrate how key notions of the Varieties of Capitalism theoretical perspective – institutional interaction, institu-tional latency, and the distinction between institutional framework and the mode of coordination that follows from these institutions – provide important theoretical insights to assess the impli-cations of causal complexity phenomenon. In particular, this mid-range level theoretical perspec-tive illuminates how necessary and/or sufficient conditions operate and vary across advanced capitalist economies.

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    Item Type: Working Paper
    Subjects for non-EU documents: Countries > France
    Countries > Germany
    EU policies and themes > Policies & related activities > economic and financial affairs > business/private economic activity
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Harvard University, Center for European Studies > Program for the Study of Germany and European Working Papers Series
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 14 May 2009
    Page Range: p. 100
    Last Modified: 15 Feb 2011 18:00
    URI: http://aei.pitt.edu/id/eprint/9282

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