The Nordic Corporate Governance Model

Abstract

The Nordic Region is remarkable in many ways and has been the subject of increasing interest over the past years. The five countries of Denmark, Finland, Iceland, Norway and Sweden are culturally closely aligned and combine a well-functioning business sector and high GDP with an expansive welfare state and high taxes. What has been well less known outside the Nordic Region is the shared corporate governance model used by companies and for the first time a comprehensive study is available in English to explain this model.

The main part of the study is the condensed presentation of the Nordic CG model. It is based on four country reports covering the three EU Member States (DK, F, S) and one EEA Member State (N). Each country report has been drawn up by a team consisting of a legal expert and a corporate governance expert with practical experience. To ensure that the report reflects actual practices, each team was assisted by a reference group consisting of business practitioners with extensive experience from large-cap listed companies and connections to the national CG code committees. To provide an international aspect, the renowned American scholar Ronald J Gilson contributed a comment on the report’s findings in a separate chapter.

The key observation of the study is that the Nordic CG model allows the shareholder majority to effectively control and take long-term responsibility for the company that they own. The alleged risk of such a system – the potential that a shareholder majority misuses its power for its own benefit at the expense of minority shareholders – is effectively curbed through a well-developed system of minority protection. The result is a governance model that encourages strong shareholders to engage in the governance of the company in their own interest, while creating value for the company and all its shareholders.

Note: The report was presented at a conference in Stockholm on 1 December 2014 and in Copenhagen on the 3 December. It is available in print from SNS – Centre for Business and Policy Studies in Stockholm and as a pdf-file copy for free downloading. On 14 February 2015, the report will be presented at a conference in Brussels. More information is available from SNS.

Keywords: corporate governance

JEL Classification: K22