A History of Corporate Governance around the World: Family Business Groups to Professional Managers

By Duncan, Keith | Journal of Management and Organization, May 2010 | Go to article overview

A History of Corporate Governance around the World: Family Business Groups to Professional Managers


Duncan, Keith, Journal of Management and Organization


A history of corporate governance around the world: Family business groups to professional managers Morck RK (Ed.) (2007) (A National Bureau of Economic Research Conference report) The University of Chicago Press, Chicago; ISBN 0-226-53680-7; PB; 687 pages + xi-xii; AUD 00.00/USD 00.00/GBP 00.00

The purpose is as the title implies, to provide an historical summary of the forces and events that have shaped the varied manifestations of corporate structures and control systems around the world. Corporate control, ownership and management have melded and morphed along complementary and contrasting paths in many countries around the world into the quite different corporate governance practices we see today.

The diversity in the paths taken and the consequential impact on economic and social growth makes this volume fascinating especially in light of recent governance issues. The spate of recent corporate governance and financial system failures, particularly in the US, has many asking the question, What is the 'best' way to control business entities and financial markets? Even Alan Greenspan is questioning his unswerving faith in the market system and its ability to self-manage the derivative market.

It is, therefore, enlightening to read about the development of the company form and associated control, monitoring and market systems over the last two centuries that have underpinned the economic growth of the developed and developing world. As we work through yet another financial market melt down, one wonders what have we really learned from the last 200 years of business and economic growth? However the global history of corporate governance, presented by Morck (2007) and co-contributors, provides some perspective in that what we are experiencing today is simply another chapter in the ups and downs of our financial history. With '20-20 hind-sight' 2008 may even be seen as a mere blip in our economic timeline.

The initial chapter provides an overview of global corporate governance and provides a framework through which to view the empirical evidence presented in the text. The remaining chapters are structured as an edited series in which the authors for each chapter detail the history of corporate governance for a different country. The chapters cover the leading industrialised Group of Seven (G7) nations (Canada, France, Germany, Italy, Japan, UK and USA) as well as the Netherlands (the oldest capitalist economy), Sweden (an example of socially-tempered capitalism) and the two fast-developing nations India and China.

The development of corporate governance in these eleven countries has been shaped by many similar and also different forces. How the systems in each economy have responded to the issues of development and periodic economic crises, have impacted on growth and development within the respective economies. The outcome in each case is the system of corporate governance we see in place today. Figure 1 on page 3 provides a compelling illustration of the governance diversity by comparing the percentage of larger corporations in 27 countries held either widely (i.e. no controlling shareholder), by governments, wealthy families, financial institutions or other institutions. The mix ranges from 100% family-controlled in Mexico, to 100% widely-held in the UK. Most other countries are characterised by 15-20% family ownership, the traditional form of control in many countries until the 20th century. There are also well documented special cases of countries like Germany exhibiting a large proportion of bank ownership, and Japan with a large percentage of 'friendly' ownership by other companies.

While the financial histories of each country are complex, there are some common threads that have influenced corporate governance development. …

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