Preventing Abuse by Controlling Shareholders
12 Pages Posted: 13 Nov 2012
Date Written: July 31, 2012
This paper is a comment on Ronald Gilson and Alan Schwarz “Constraints on Private Benefits of Control: Ex Ante Control Mechanisms versus Ex Post Transaction Review”. Together with that paper it will appear in the Journal of Institutional and Theoretical Economics 169 (1) in 2013, in a special issue devoted to Behavioral Theory of Institutions. I argue that the arguments of Gilson and Schwarz are convincing, but that the underlying assumptions may be stronger than the authors suggest. In particular, the G&S paper adopts a US shareholder perspective on corporate governance and is based on standard rationality assumptions. In this comment, I discuss whether and to what extent the recommendations are relevant in the EU context and whether the paper’s conclusions are robust when insights from behavioral economics are included.
Keywords: Corporate Governance, Behavioral Economics
JEL Classification: G30, G38, K22, D03
Suggested Citation: Suggested Citation