Preventing Abuse by Controlling Shareholders

12 Pages Posted: 13 Nov 2012

See all articles by Eric van Damme

Eric van Damme

TILEC and CentER, Tilburg University

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

van Damme, Eric E.C., Preventing Abuse by Controlling Shareholders (July 31, 2012). TILEC Discussion Paper No. 2012-038, Available at SSRN: or

Eric E.C. Van Damme (Contact Author)

TILEC and CentER, Tilburg University ( email )

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Tilburg, 5000 LE
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