This chapter will use the historical evolution of fiduciary norms in Japan and East Asia to examine the intersection of fiduciary law and transnational legal ordering theory. Various strands of fiduciary notions arrived in East Asia as part of modernization effort beginning in the late nineteenth century. The civilian regulation of conflicted transactions and duty of care was introduced in Japan, South Korea, and Taiwan as part of Civil Code and Commercial Code, which was followed by statutory introduction of common law trust in early twentieth century, and American corporate governance theory after World War II. Singapore and Hong Kong adopted English common law and equity jurisprudence along with legislations that follow UK and Commonwealth models, which were frequently updated to meet the demands of international financial market. While tensions among common law, civil law, and indigenous norms were conspicuous during the early phases of modernization and reception, more recent decades of globalization have seen greater scale and dynamics of transnational interactions, most notably the rise of UK-style soft law initiative. Throughout the regional history, fiduciary norms have been shaped by shifting colonial pressures and economic hegemony, wars, revolutions, and financial crises, as well as legislative imitation and academic learning. By way of conclusion, this chapter argues that while fiduciary law presents a rich field for exploring process of transnational legal ordering, the theory of transnational legal ordering provides a valuable framework to understand both historical and contemporary evolution of fiduciary law both in individual jurisdictions and across jurisdictional borders.

Companies are advocating in favor of Paris-aligned climate policies and the majority of companies are not holding their trade associations accountable for their lobbying on climate policy. This is contrary to the fact that many companies have the correct risk management and governance systems in place to manage economic threats from climate change. Following Ceres’s theory of change, the impetus for the project was to engage in an action that would result in short-, medium-term outcomes, and ultimately resulting in a long-term impact. For the responsible policy engagement project, Ceres took action to identify the misalignment between what corporations state they are doing on climate change, and whether their policy actions represent those statements, in hopes to influence companies to better align their lobbying practices in the short term. In the medium term, the goal is more ambition climate policy adoption across the United States, thus impacting the long-term goals of overall emissions reduction.

American politics has become sharply polarized. Partisan deadlock has prevented the addressing of critical public policy issues. A prime example is Congress’s inability to pass campaign finance legislation. Corporations spend unlimited amounts of company funds to promote management’s preferred candidates without disclosure. The distortive effects of large unaccountable corporate political expenditures are evident, and the opportunity for corrupting our politics is clear. In addition, large undisclosed corporate contributions pose a threat to a well-functioning marketplace and democracy. This chapter addresses the challenge of addressing corporate political spending through the informal, non-state suasion and advocacy of the nonprofit Center for Political Accountability. CPA is a case study in successful private ordering, prompting S&P 500 companies to disclose corporate political spending; develop policies that will ensure good compliance and governance; adopt codes of conduct to reflect and inspire pro-accountability behavior; and successfully compete with other firms for best disclosure and accountability practices.

This chapter examines the role of disclosure as a tool for promoting corporate political accountability by reviewing how shareholders reacted to various events in the United States and abroad that either changed the ability of firms to engage in the political process or revealed previously hidden corporate political activity. The conclusions drawn from this summary are mixed, with investors’ reactions contingent on myriad factors, including the form of the political activity engaged in, prior contestation over such activity by shareholders, and other firm-level nonmarket and market dynamics. The chapter concludes by discussing the limits of disclosure as a tool for regulating corporate political activity, as well as public policy more broadly, and advocates for broader, institutional reforms regarding the role of money in politics.

Chapter 1 unpacks the traditional framework that shapes how scholars and policymakers think of corporate governance and its role in financial development and market growth. It reviews the main strands of literature that have nourished legal scholarship in the field of economic development law and development studies and the new institutional economics tradition. It describes how these strands connect with the main theories underlying scholarship on corporate governance and financial market development and explains that the literature highlight the importance of investor protection for the growth and development of markets.

Part III applies the suggested analytical framework at the micro level by delving deep into China’s corporate and capital market development puzzle. It uses the explanatory power of law and political economy to bring more clarity to China’s evolving approach to corporate governance. The purpose is to better understand the role played by formal law in governing Chinese public firms and ultimately in China’s capital market growth and to unpack the political–economic determinants that drove its evolution. The chapters in this part of the book pay particular attention to the creation and efficacy of corporate governance institutions, both traditional and idiosyncratic, that operate in the Chinese market.

This part of the book finds that law and political economy dynamics have produced operational results. They have mobilized market participants (both economic and political) to design and deploy various growth-promoting mechanisms within firms and in the market at large. The analysis shows how such mechanisms at times triggered, supported, boosted, or replaced more conventional corporate governance institutions in ways that eventually marched the market forward.

The chapter examines the corporate governance institutions that developed during the Legal Modernization Era. It analyzes the traditional corporate governance mechanisms, both internal and external to the firm, that were embraced in China and adapted to domestic political–economic circumstances. The chapter discusses how China’s superficially convergent, investor-oriented corporate governance framework actually diverged in practice. It illuminates the political functions of law, showing how the corporate governance framework was ultimately directed to support the reconsolidation of political–economic powers and the shift toward state capitalism. The chapter offers comparative insights drawn from alternative systems of corporate governance and analyzes the implications of the Chinese framework for investors in the Chinese market.

This chapter begins with the problem of Donald Trump on social media—both the propaganda that led to his election and the companies’ seeming inability to control his supporters while in office—leading up to the January 6 2021 coup attempt. It contextualizes these events in a broader narrative about social media “political bias,” which turns out not to be a problem of bias so much as an effort by politicians to intimidate companies into under-moderating their allies. Such efforts aim to leverage the inability of the companies to exercise self-control in the face of short-term temptations and threats. Platforms, like governments, have problems with internal governance, in which personnel have incentives that diverge from the interests of the overall organization or operate under suboptimal time horizons. In the literature on governments, the tools to mitigate these problems tend to travel under the rubric of “the rule of law.” This chapter defends the idea of dispersing power to independent institutions under the control or at least supervision of diverse groups of employees and nonemployees as a key tool to create a kind of platform rule of law.

This chapter draws a picture of ownership and control change of large Bulgarian companies after the collapse of communism in 1989. Post-communist privatization has fundamentally changed the ownership landscape. First, in 2018–2019 the state was the largest shareholder in only 9% of the top 100 companies (down from 42% in the mid-1990s). The state has virtually disappeared as a direct largest shareholder of listed companies. Nevertheless, the state still remained among the key ultimate owners among the top 20 companies. Second, foreign investors have become the largest shareholders in 46% of the top 100 companies (up from 31% in the mid-1990s) and in 11.7% of listed companies (up from 6.25% in the mid-1990s).Third, there was a remarkable increase in ownership concentration in listed companies and the percentage of listed companies with dispersed ownership has declined. The destruction of large Bulgarian firms, proxied by their exit rate, was not coupled with an entry of newly established private firms into the top 100 companies. There was no sustainable development of the domestic largest shareholders. The chapter discusses potential determinants explaining the observed ownership changes.

This chapter examines ownership and control of Swedish companies. Sweden witnessed a significant increase in ownership concentration in the top 20 and top 100 firms in the past few decades. Equity ownership concentration remained virtually the same in listed companies. A few major ownership patterns may be documented. First, the large shareholders remained the dominant corporate governance model in Sweden. Second, the largest domestic shareholders, such as families and holding companies (closed-end investment funds) have persisted in the past few decades. Third, there was an increase in the share of foreign owners as the largest shareholders in both the top 100 and listed companies. Fourth, there was also an emergence of new entrepreneurs as the largest shareholders in the large Swedish companies. The chapter has documented both the persistence of corporate insiders and ownership changes (e.g. an increase in foreign ownership, establishment of new domestic largest individual shareholders) in the past few decades. It also shows the importance of domestic institutional investors. It discusses a few reasons why the ownership structure remains persistent despite the substantial influence of global market forces, liberalization of domestic markets and corporate governance and legal reforms in Sweden.

This chapter studies the ownership transformation of the Slovenian economy after 1991. Although the Slovenian ownership structure was not formally dominated by the state initially (due to so-called social ownership), it became so due to the distribution formula applied in the course of privatization. Until 2008, Slovenia was perceived as the new EU member state with the largest state holdings and the lowest share of foreign ownership. However, due to numerous management buyouts and ownership consolidations within and across industries before 2009, the landscape of Slovenian corporate ownership changed dramatically in the decade following the financial crisis. The main reason was that companies involved in management buyouts, mergers and acquisitions became insolvent after refinancing conditions tightened with the onset of the financial crisis. This led to radical changes in ownership through a series of foreign takeovers of troubled companies, the privatization of fifteen state-owned enterprises and all the banks receiving the state aid in the course of bank restructuring. This explains the radical increase in ownership concentration in the 100 largest Slovenian companies over the three decades and the rise of holding companies and foreign strategic investors as the main owners of the largest Slovenian companies in the late 2010s.

The introductory chapter presents an overview of the book. It starts with the basic research questions and the objectives of the book. One of the main objectives is to make available systematic and comparable accounts of ownership structure change (respectively, persistence) in large firms in eight European countries over the last few decades. The second main objective is to examine the likely determinants of ownership structure change in each country. The third objective is to apply an international comparative approach to ownership structure changes to shed some light on the questions of whether similar forces impact ownership change or persistence in each country, whether particular institutional factors influence ownership change/persistence, and whether the eventual decline of corporate insiders and the state and the rise of foreign and institutional investors are influenced by similar forces in each country. The chapter provides an overview of the global corporate governance revolution in the 1990s as well as its countervailing forces. It discusses the theoretical assumptions about the determinants of corporate ownership, the data used in the country chapters, and gives an overview over chapter contents. The chapter concludes with cross-country summary, implications for the theory of the firm and policy implications.

The United Kingdom was the first country to develop a code of best practice of corporate governance. This chapter gives a brief overview of UK corporate governance regulation, including recent reforms, followed by a discussion of the listing and disclosure rules. It then performs an empirical study of the control and ownership of the top 20, top 100 and the listed UK companies for two distinct points in time, i.e. the 1990s and 2018–2019. The following patterns emerge. Over the period ranging from the late 1990s to 2018–2019, the percentage of listed companies in the top 20 and top 100 suffered a substantial decrease. In contrast, the percentage of fully owned subsidiaries among the top UK companies shot up from virtually nil to more than half of such companies. Still, the average listed UK company remains widely held in 2018–2019 (Goergen and Renneboog, 2001). The chapter then proceeds by identifying potential determinants explaining the observed ownership changes. The chapter concludes with a number of reflections on how UK corporate ownership and control may change during the post-Brexit period.

This chapter presents evidence on ownership and control in Germany. Ownership concentration dropped in the large German companies in the past few decades. Yet it remained relatively higher than in their counterparts in the Anglo-American world. There was a remarkable increase in the number of companies with dispersed ownership. Yet the widely held companies accounted for only 20% of the top 20 firms, 17% of the top 100 and about 21% of listed companies in 2018–2019. A few other patterns of ownership change have been documented: a decline in the share of other German companies (non-financial and holding companies), domestic banks and insurance companies, and the state as largest shareholders, and the rise of foreign investors. The role of families as key largest shareholders has varied by company size. The chapter also discusses the determinants of corporate ownership persistence and why the forces of path dependence stemming from the German national system of ‘coordinated market economy’ appear to be more powerful than the pressure coming from global markets and legal reforms in the 1990s.

This chapter examines ownership and control structures in Austria. As many other European countries, Austria experienced a shake-up in securities law, mainly induced by EU Directives (such as those on shareholder rights, takeovers and transparency). Despite of investor favourable changes in the securities law, ownership concentration remain very high in Austria in listed and unlisted companies alike. Thus, large shareholders remain the predominant corporate governance model in Austria. The identities of the controlling shareholders remained very much the same during the past decades with one important exception, banks. Pyramidal ownership structures have remained prevalent as of 2018–2019 in Austria, since non-financial firms and holding companies together controlled nearly half of the top 100 Austrian firms. Thus, families and individuals which stand behind those companies remained the most important ultimate controlling owners. There was a remarkable decline of state control of listed companies after privatization but the state retained an important role as large and controlling shareholder in many of the largest (listed and unlisted) Austrian companies. While around twenty-five years ago foreign owners already controlled around 20% of the largest Austrian companies, this percentage kept increasing. The chapter discusses the role of ‘complementary institutions’, the preferences of both controlling owners and prospective buyers, and a missing political will to embrace a more shareholder oriented model.

US academic discourse on director interlocks isn’t new. Yet, the increased attention to common ownership has also brought to light the increased tendency of interlocked directors to serve in the same industry. I termed these directors as horizontal directors in my earlier work – shining a light on the benefits they bring to investors and companies but also the risks they pose to corporate governance and antitrust law. This chapter further revisits the prevalence of horizontal directors, armed with six additional years of data, and shows that the prevalence of horizontal directors has remained steady, even as attention to common ownership has increased in recent years. These findings should serve as a clarion call to regulators – urging them to directly address the perils of horizontal directors while maintaining some of their key benefits.

In this chapter, we provide an overview of the Italian legislation on interlocking directorates and its enforcement in the last decade. In 2011, Italy introduced a specific anti-interlocking provision aimed at promoting competition in the banking, insurance, and financial sectors. After explaining why these personal ties may facilitate a collusive or quiet life equilibrium among competitors, we attempt to evaluate the effectiveness and limits of the Italian interlocking ban. Using the banking sector as a case study, we present data on the number of interlocking directorates that persist among the 25 largest banking groups operating in Italy at the end of 2018. The result of our study is that interlocking directorates among major Italian banks and banking groups seem to have disappeared. This is in line with empirical studies showing that, in the period following the entry into force of the Italian interlocking ban, bank lending rates fell, indicating more vigorous competition. We conclude our chapter by questioning whether the 2011 Italian interlocking ban has had any effect on the ownership structure of the relevant market players, for instance contributing to the disposal of minority and cross-shareholdings held by competing companies, and on the composition of their governing bodies.