Chapter

A Theory of Partisanship and Corporate Governance Change

Roger M. Barker

in Corporate Governance, Competition, and Political Parties

Published in print January 2010 | ISBN: 9780199576814
Published online May 2010 | e-ISBN: 9780191722509 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199576814.003.0002
A Theory of Partisanship and Corporate Governance Change

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An analytical framework is outlined with three social actors: blockholders, insider labor, and outsiders. Each has differing corporate governance preferences. Blockholders and insider labor are represented by conservative and Left parties respectively. Outsiders do not have their own party, and represent a potential source of new votes for both parties. However, they require a commitment to pro‐shareholder corporate governance reform in order to win their support. As long as economic rents are substantial (due to low levels of product market competition), neither the Left nor conservative parties are willing to solicit the support of outsiders. Both of their core constituents benefit from the sharing of economic rents. However, if economic rents decline, insider labor no longer has an interest in sustaining a self-regulatory blockholder model of corporate governance. In contrast, conservative parties remain the apologists of the blockholder model.

Keywords: European corporate governance; partisanship; product market competition; economic rents; insider labor; blockholders; outsiders; Left government; Conservative government; minority shareholders

Chapter.  12953 words.  Illustrated.

Subjects: International Business

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