Summary articles
Comparative Corporate Governance (EBM083A05)
Semester 2.1 2022/2023
University of Groningen
Lecture 1: Comparative Corporate Governance: an introduction.
• Aguilera R.V., & Jackson G. (2003). The cross-national diversity of corporate
governance: dimensions and determinants. Academy of Management Review, 28/3,
447-465
Lecture 2: Corporate investors and investor protection
• La Porta R., Lopez-de-Silanes F., & Shleifer A. (1999). Corporate Ownership around
the World. Journal of Finance, 54/2, 471-517. (only pages 471-498, you can skip the
rest).
• Aguilera R.V.,Crespi-Cladera, R. (2016). Global Corporate governance: on the
relevance of firms’ownership structure, Journal of World Business, 51, pp.50-57.
• Aguilera, R.V., J.Capapé, and J.Santiso (2016) Sovereign Wealth Funds: a strategic
governance view, Academy of Management Perspectives, Vol.30.No.1, pp.5-23.
Lecture 3: Diffusion of Corporate Governance practices
• Cuomo, F. C.Mallin & A.Zattoni (2016) Corporate Governance Codes: a review and a
research agenda, Corporate Governance: an International Review, 24(3), 222-241.
• Witt, M.A., Fairnshmidt, S. Aguilera, R.V., (2022) Our board, our rules: Nonconformity
to Global Corporate Governance Norms, Administrative Science Quarterly, Vol.67(1),
pp.131-166. (you can leave out pp.142-148).
• The Dutch Corporate Governance Code (2022), issued by the Dutch Corporate
Governance Monitoring Committee, pp.1-13 (flip through the rest) (see Brightspace
for the link to the relevant pdf).
Lecture 4: Diversity in upper echelons: causes and consequences
• van Veen K., & Elbertsen J. (2008). Governance Regimes and Nationality Diversity in
Corporate Boards: A Comparative Study of Germany, the Netherlands and the United
Kingdom. Corporate Governance: An International Review, 16/5, 386-399.
• Veltrop, D. B., Hermes, N., Postma, T. J. B. M. and de Haan, J. (2015), A Tale of Two
Factions: Why and When Factional Demographic Faultlines Hurt Board Performance.
Corporate Governance: An International Review, 23: 145–160. doi:
10.1111/corg.12098.DOI: 10.1111/corg.12092
• Veltrop, D. B., Molleman, E., Hooghiemstra, R. B. H. & van Ees, H. (2017) Who's the
Boss at the Top? A Micro-Level Analysis of Director Expertise, Status and Conformity
Within Boards, Journal of Management Studies. 54(7), p.1079-1110.
Lecture 5: Networks and board dynamics
• K.van Veen & E.M. Heemskerk, (2018) Interlocking Directorate Networks, Springer
Encyclopedia for Social Networks and Mining. DOI: https://doiorg.proxy-
ub.rug.nl/10.1007/978-1-4614-7163-9_274-1*
• Heemskerk, E., Fennema, M., Carroll, W.K. (2016) The global corporate elite after the
financial crisis: evidence from the transnational network of interlocking directorates,
Global Networks, Volume16, Issue 1, 68-88.
• Boivie,S. Bednar, M.K., Aguilera, R.V. & Andrus, J.L. (2016) Are Boards Designed to
Fail? The Implausibility of Effective Board Monitoring, The Academy of Management
Annals, DOI: 10.1080/19416520.2016.1120957
,Lecture 6: Executive compensation
• Frydman, C. and D.Jenter (2010). CEO compensation, Annual Review of Financial
Economics, 2: 75-102. DOI:10.1146/annurev-financial-120209-133958
• Van Veen, K. and R.P.M Wittek,(2016). Relational signaling and the rise of CEO
compensation: … it is not just about money, but about what the money says, Long
Range Planning, doi:10.1016/j.lrp.2015.12.009
Lecture 7: Overview of emerging new themes
• Aguilera, R.V., Alberto Aragón-Correa, J., Marano, V. (2022) Rethinking corporate
power to tackle grand Challenges: Lessons from Political Philosophy, Academy of
Management Review, Vol.47. No.4, pp.637-645.
• Mayer, C. (2021) The Future of the Corporation and the Economics of Purpose,
Journal of Management Studies, v.58 n.3 (May 2021). pp.887-901.
2
,1.1 Aguilera R.V., & Jackson G. (2003). The cross-national diversity of corporate
governance: dimensions and determinants. Academy of Management Review, 28/3,
447-465
Corporate governance concerns the structure of rights and responsibilities among the parties
with a stake in the firm. Internationalization has sparked policy debates over the
transportability of best practices and fuelled academic studies on the prospects of
international convergence. This article develops a theoretical model to identify and explain
the diversity of corporate governance across advanced capitalist economies. It examines
governance in terms of three stakeholder groups (capital, management, and labor) and how
institutional configurations shape how each group relates to firm decision-making and control
over resources. It also examines how different configurations of institutions support different
sorts of interactions among stakeholders in corporate governance.
Shifting paradigms: from agency to embeddedness
Corporate governance is traditionally studied through the lens of agency theory, which
views the modern corporation as a contract between shareholders (principals) and managers
(agents). Different mechanisms are needed to ensure the interests of both principals and
agents are aligned. Agency costs occur when shareholders have difficulty monitoring
management and enforcing contractual limits.
Comparative corporate governance is usually studied in terms of the mechanisms available
to minimize agency problems. However, agency theory overlooks the identities of
stakeholders, the interdependencies among other stakeholders, and the institutional
environment influencing corporate governance. The theoretical challenge is to conceptualize
corporate governance as embedded in different social contexts, where economic action is
also social action.
COMPARATIVE INSTITUTIONAL ANALYSIS
Institutional theory examines how corporations
are embedded in formal and informal rules.
→ Researchers have argued that politics shape
corporate governance and that national diversity
reflects institutional constraints.
This theory proposes that institutions create
opportunities for specialization which can yield
advantages for different business systems. Actor-
centered institutional models focus on three
stakeholders (capital, labor, and management)
and analyze the institutional mechanisms that
shape cross-national variation in corporate
governance. This model aims to integrate
different institutional domains and stakeholder
dimensions into a single model.
Capital in the Corporate Governance Equation
Capital can be divided into three dimensions:
1. Financial interests,
2. Commitment/liquidity, and
3. Control through debt or equity.
Financial interests are motivated by the prospect of financial return on investment, while
strategic interests are motivated by nonfinancial objectives like control. Liquidity refers to
the ability of owners to exit with minimal loss, while commitment involves dependence on
3
, firm-specific assets. Debt and equity involve different risks and control mechanisms, with
creditors being more risk averse and favoring stability, and owners having more control but
losing it in bankruptcy. These divisions are used to distinguish between countries, for
example Italy and Japan, which have high ownership concentration but different strategic
interests.
Property rights are legal structures that define how shareholders can exert control over a
corporation. Depending on the country, these rights can favor different types of shareholders.
In countries where property rights favor large shareholders, capital tends to pursue strategic
interests towards the firm and exercise control via commitment. In countries where property
rights protect minority shareholders, capital tends to pursue financial interests towards the
firm and exercise control via liquidity.
The financial system influences how capital is related to a firm and can come in two main
forms: bank-based or market-based.
• In bank-based systems, households provide deposits to banks which then extend
loans to firms, which leads to close capital monitoring and control of the firm.
• In market-based systems, households invest in companies' publicly issued equity
and the primary monitoring role is left to institutional investors and other
shareholders.
This encourages equity finance and shareholders have the option to exit if the firm no longer
meets their interests. The characteristics of a financial system can be linked to the regulation
of financial institutions and the mix of public and private pensions. In summary, financial
systems influence corporate governance through their capacity to provide different sources
of capital and to affect the relationship with the firm.
Interfirm networks have a strong influence on the relationship between capital and the firm.
In countries with multiplex networks (e.g. Germany, Japan and Spain), ownership stakes,
supplier relations, board representation and debt and equity claims overlap, making exit
more costly and allowing capital to pursue strategic interests. In contrast, networks in the US
and UK are much looser and capital pursues purely financial interests, using liquidity to
exercise control.
Labor is largely neglected in the corporate governance literature and is seen as an
exogenous parameter. However, labor can influence corporate decision making by creating
rules limiting managerial authority through mechanisms such as collective bargaining, job
control, and labor law. Comparative industrial relations distinguishes between strategies of
external control and internal participation. Representation rights vary in their strength and
scope and can be established through unilateral employer action, collective bargaining, or
statutory law. Representation rights influence labor’s control over decisions and can range
from rights of information, consultation, and codetermination to unilateral worker control.
Labor may also pursue ownership strategies by using voting rights attached to pension funds
or stock options.
Union organization can be divided into three types: (1) class, (2) occupation, and (3)
enterprise. These models often exist together in countries, and the US is internally
heterogeneous with craft, industrial, and unorganized sectors. Unions can influence
employee orientation towards internal or external control in corporate decisions. Class-based
unions, such as political and industrial, tend to favor external control, while craft-based
unions and enterprise-based unions, who represent employees within a particular firm,
support internal participation. This can shape the relation between labor and the firm.
Proposed propositions are that in countries with class-based and craft-based unionism, labor
tends to pursue external control, and in countries with enterprise-based unionism, labor
pursues strategies of internal participation.
4
Comparative Corporate Governance (EBM083A05)
Semester 2.1 2022/2023
University of Groningen
Lecture 1: Comparative Corporate Governance: an introduction.
• Aguilera R.V., & Jackson G. (2003). The cross-national diversity of corporate
governance: dimensions and determinants. Academy of Management Review, 28/3,
447-465
Lecture 2: Corporate investors and investor protection
• La Porta R., Lopez-de-Silanes F., & Shleifer A. (1999). Corporate Ownership around
the World. Journal of Finance, 54/2, 471-517. (only pages 471-498, you can skip the
rest).
• Aguilera R.V.,Crespi-Cladera, R. (2016). Global Corporate governance: on the
relevance of firms’ownership structure, Journal of World Business, 51, pp.50-57.
• Aguilera, R.V., J.Capapé, and J.Santiso (2016) Sovereign Wealth Funds: a strategic
governance view, Academy of Management Perspectives, Vol.30.No.1, pp.5-23.
Lecture 3: Diffusion of Corporate Governance practices
• Cuomo, F. C.Mallin & A.Zattoni (2016) Corporate Governance Codes: a review and a
research agenda, Corporate Governance: an International Review, 24(3), 222-241.
• Witt, M.A., Fairnshmidt, S. Aguilera, R.V., (2022) Our board, our rules: Nonconformity
to Global Corporate Governance Norms, Administrative Science Quarterly, Vol.67(1),
pp.131-166. (you can leave out pp.142-148).
• The Dutch Corporate Governance Code (2022), issued by the Dutch Corporate
Governance Monitoring Committee, pp.1-13 (flip through the rest) (see Brightspace
for the link to the relevant pdf).
Lecture 4: Diversity in upper echelons: causes and consequences
• van Veen K., & Elbertsen J. (2008). Governance Regimes and Nationality Diversity in
Corporate Boards: A Comparative Study of Germany, the Netherlands and the United
Kingdom. Corporate Governance: An International Review, 16/5, 386-399.
• Veltrop, D. B., Hermes, N., Postma, T. J. B. M. and de Haan, J. (2015), A Tale of Two
Factions: Why and When Factional Demographic Faultlines Hurt Board Performance.
Corporate Governance: An International Review, 23: 145–160. doi:
10.1111/corg.12098.DOI: 10.1111/corg.12092
• Veltrop, D. B., Molleman, E., Hooghiemstra, R. B. H. & van Ees, H. (2017) Who's the
Boss at the Top? A Micro-Level Analysis of Director Expertise, Status and Conformity
Within Boards, Journal of Management Studies. 54(7), p.1079-1110.
Lecture 5: Networks and board dynamics
• K.van Veen & E.M. Heemskerk, (2018) Interlocking Directorate Networks, Springer
Encyclopedia for Social Networks and Mining. DOI: https://doiorg.proxy-
ub.rug.nl/10.1007/978-1-4614-7163-9_274-1*
• Heemskerk, E., Fennema, M., Carroll, W.K. (2016) The global corporate elite after the
financial crisis: evidence from the transnational network of interlocking directorates,
Global Networks, Volume16, Issue 1, 68-88.
• Boivie,S. Bednar, M.K., Aguilera, R.V. & Andrus, J.L. (2016) Are Boards Designed to
Fail? The Implausibility of Effective Board Monitoring, The Academy of Management
Annals, DOI: 10.1080/19416520.2016.1120957
,Lecture 6: Executive compensation
• Frydman, C. and D.Jenter (2010). CEO compensation, Annual Review of Financial
Economics, 2: 75-102. DOI:10.1146/annurev-financial-120209-133958
• Van Veen, K. and R.P.M Wittek,(2016). Relational signaling and the rise of CEO
compensation: … it is not just about money, but about what the money says, Long
Range Planning, doi:10.1016/j.lrp.2015.12.009
Lecture 7: Overview of emerging new themes
• Aguilera, R.V., Alberto Aragón-Correa, J., Marano, V. (2022) Rethinking corporate
power to tackle grand Challenges: Lessons from Political Philosophy, Academy of
Management Review, Vol.47. No.4, pp.637-645.
• Mayer, C. (2021) The Future of the Corporation and the Economics of Purpose,
Journal of Management Studies, v.58 n.3 (May 2021). pp.887-901.
2
,1.1 Aguilera R.V., & Jackson G. (2003). The cross-national diversity of corporate
governance: dimensions and determinants. Academy of Management Review, 28/3,
447-465
Corporate governance concerns the structure of rights and responsibilities among the parties
with a stake in the firm. Internationalization has sparked policy debates over the
transportability of best practices and fuelled academic studies on the prospects of
international convergence. This article develops a theoretical model to identify and explain
the diversity of corporate governance across advanced capitalist economies. It examines
governance in terms of three stakeholder groups (capital, management, and labor) and how
institutional configurations shape how each group relates to firm decision-making and control
over resources. It also examines how different configurations of institutions support different
sorts of interactions among stakeholders in corporate governance.
Shifting paradigms: from agency to embeddedness
Corporate governance is traditionally studied through the lens of agency theory, which
views the modern corporation as a contract between shareholders (principals) and managers
(agents). Different mechanisms are needed to ensure the interests of both principals and
agents are aligned. Agency costs occur when shareholders have difficulty monitoring
management and enforcing contractual limits.
Comparative corporate governance is usually studied in terms of the mechanisms available
to minimize agency problems. However, agency theory overlooks the identities of
stakeholders, the interdependencies among other stakeholders, and the institutional
environment influencing corporate governance. The theoretical challenge is to conceptualize
corporate governance as embedded in different social contexts, where economic action is
also social action.
COMPARATIVE INSTITUTIONAL ANALYSIS
Institutional theory examines how corporations
are embedded in formal and informal rules.
→ Researchers have argued that politics shape
corporate governance and that national diversity
reflects institutional constraints.
This theory proposes that institutions create
opportunities for specialization which can yield
advantages for different business systems. Actor-
centered institutional models focus on three
stakeholders (capital, labor, and management)
and analyze the institutional mechanisms that
shape cross-national variation in corporate
governance. This model aims to integrate
different institutional domains and stakeholder
dimensions into a single model.
Capital in the Corporate Governance Equation
Capital can be divided into three dimensions:
1. Financial interests,
2. Commitment/liquidity, and
3. Control through debt or equity.
Financial interests are motivated by the prospect of financial return on investment, while
strategic interests are motivated by nonfinancial objectives like control. Liquidity refers to
the ability of owners to exit with minimal loss, while commitment involves dependence on
3
, firm-specific assets. Debt and equity involve different risks and control mechanisms, with
creditors being more risk averse and favoring stability, and owners having more control but
losing it in bankruptcy. These divisions are used to distinguish between countries, for
example Italy and Japan, which have high ownership concentration but different strategic
interests.
Property rights are legal structures that define how shareholders can exert control over a
corporation. Depending on the country, these rights can favor different types of shareholders.
In countries where property rights favor large shareholders, capital tends to pursue strategic
interests towards the firm and exercise control via commitment. In countries where property
rights protect minority shareholders, capital tends to pursue financial interests towards the
firm and exercise control via liquidity.
The financial system influences how capital is related to a firm and can come in two main
forms: bank-based or market-based.
• In bank-based systems, households provide deposits to banks which then extend
loans to firms, which leads to close capital monitoring and control of the firm.
• In market-based systems, households invest in companies' publicly issued equity
and the primary monitoring role is left to institutional investors and other
shareholders.
This encourages equity finance and shareholders have the option to exit if the firm no longer
meets their interests. The characteristics of a financial system can be linked to the regulation
of financial institutions and the mix of public and private pensions. In summary, financial
systems influence corporate governance through their capacity to provide different sources
of capital and to affect the relationship with the firm.
Interfirm networks have a strong influence on the relationship between capital and the firm.
In countries with multiplex networks (e.g. Germany, Japan and Spain), ownership stakes,
supplier relations, board representation and debt and equity claims overlap, making exit
more costly and allowing capital to pursue strategic interests. In contrast, networks in the US
and UK are much looser and capital pursues purely financial interests, using liquidity to
exercise control.
Labor is largely neglected in the corporate governance literature and is seen as an
exogenous parameter. However, labor can influence corporate decision making by creating
rules limiting managerial authority through mechanisms such as collective bargaining, job
control, and labor law. Comparative industrial relations distinguishes between strategies of
external control and internal participation. Representation rights vary in their strength and
scope and can be established through unilateral employer action, collective bargaining, or
statutory law. Representation rights influence labor’s control over decisions and can range
from rights of information, consultation, and codetermination to unilateral worker control.
Labor may also pursue ownership strategies by using voting rights attached to pension funds
or stock options.
Union organization can be divided into three types: (1) class, (2) occupation, and (3)
enterprise. These models often exist together in countries, and the US is internally
heterogeneous with craft, industrial, and unorganized sectors. Unions can influence
employee orientation towards internal or external control in corporate decisions. Class-based
unions, such as political and industrial, tend to favor external control, while craft-based
unions and enterprise-based unions, who represent employees within a particular firm,
support internal participation. This can shape the relation between labor and the firm.
Proposed propositions are that in countries with class-based and craft-based unionism, labor
tends to pursue external control, and in countries with enterprise-based unionism, labor
pursues strategies of internal participation.
4
