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State Ownership and Corporate Governance

Mariana Pargendler

Fundação Getulio Vargas Law School at São Paulo; New York University School of Law

May 1, 2012

Fordham Law Review, Vol. 80, No. 6, 2012

State ownership of publicly-traded corporations remains pervasive around the world, and has been increasing in recent years. Existing literature focuses on the implications of government ownership for corporate governance and performance at the firm level. This Article, by contrast, explores the different but equally important question of whether the presence of the state as a shareholder can impose negative externalities on the corporate law regime available to the private sector.

Drawing from historical experiments with government ownership in the United States, Brazil, China, and Europe, this study shows that the conflict of interest stemming from the state’s dual role as a shareholder and regulator can influence the content of corporate laws to the detriment of outside investor protection and efficiency. It thus addresses a gap in the literature on the political economy of corporate governance by incorporating the political role of the state as shareholder as another mechanism to explain the relationship between corporate ownership structures and legal investor protection. Finally, this Article explores the promise of different institutional arrangements to constrain the impact of the state’s interests as a shareholder on the corporate governance environment, and concludes by offering several policy recommendations.

Number of Pages in PDF File: 57

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Date posted: May 29, 2011 ; Last revised: August 7, 2013

Suggested Citation

Pargendler, Mariana, State Ownership and Corporate Governance (May 1, 2012). Fordham Law Review, Vol. 80, No. 6, 2012. Available at SSRN: http://ssrn.com/abstract=1854452 or http://dx.doi.org/10.2139/ssrn.1854452

Contact Information

Mariana Pargendler (Contact Author)
Fundação Getulio Vargas Law School at São Paulo ( email )
R. Rocha, 233, Bela Vista
São Paulo, 01330-000

New York University School of Law ( email )
40 Washington Square South
New York, NY 10012-1099
United States
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