Abstract

http://ssrn.com/abstract=1532671
 


 



Politics-Business Interaction Paths


Marianna Belloc


Sapienza University of Rome - Department of Economics

Ugo Pagano


University of Siena - Department of Economics; Central European University (CEU)

December 2009

CESifo Working Paper Series No. 2883

Abstract:     
Most pre-crisis explanations of the various corporate governance systems have considered the separation between ownership and control to be an advantage of the Anglo-American economies. They have also attributed the failure of other countries to achieve these efficient arrangements to their different legal and/or electoral systems. In this paper we compare this view with the co-evolution approach based on the hypothesis that politics and corporate governance influence each other, generating complex interactions of financial and labour market institutions. Countries cluster along different complementary politics-business interaction paths and there is no reason to expect, or to device policies for, their convergence to a single model of corporate governance. We argue that this hypothesis provides a more convincing explanation of the past histories of major capitalist economies and can suggest some useful possible scenarios of their future institutional development. Bayesian model comparison suggests that the co-evolution approach turns out at least as influential as the competing theories in explaining shareholder and worker protection determination.

Keywords: employment protection, corporate governance, ownership concentration, Bayesian model estimation, Bayesian model comparison

JEL Classification: G32, G34, J50, K22, P10

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Date posted: January 10, 2010  

Suggested Citation

Belloc, Marianna and Pagano, Ugo, Politics-Business Interaction Paths (December 2009). CESifo Working Paper Series No. 2883. Available at SSRN: http://ssrn.com/abstract=1532671

Contact Information

Marianna Belloc
Sapienza University of Rome - Department of Economics ( email )
Via del Castro Laurenziano 9
Rome, 00161
Italy
Ugo Pagano (Contact Author)
University of Siena - Department of Economics ( email )
Piazza S. Francesco, 7
I-53100 Siena
Italy
+39 057 7232614 (Phone)
+39 057 7232661 (Fax)
Central European University (CEU) ( email )
Nador utca 9
Budapest, H-1051
Hungary
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