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Corporate Networks as Informal Governance Mechanisms: A Small Worlds Approach to Sweden

Stafsudd, Anna LU (2009) In Corporate Governance 17(1). p.62-76
Abstract
Manuscript Type: Empirical Research Question/Issue: It is proposed that informal governance mechanisms such as social control, in the form of norms and corporate networks, may complement formal governance mechanisms, such as laws, in providing investor protection. Research Findings/Results: A comparison of stock markets and investor protection for Denmark, Germany, Italy, Sweden, the UK, and US shows that the Swedish stock market is larger and more vital than would be expected from an evaluation of its formal investor protections. Subsequent analyses show that Scandinavian business standards are of the highest level, with the UK, the US, and Germany close behind, and Italy last. Comparison of owner networks using small world methodology... (More)
Manuscript Type: Empirical Research Question/Issue: It is proposed that informal governance mechanisms such as social control, in the form of norms and corporate networks, may complement formal governance mechanisms, such as laws, in providing investor protection. Research Findings/Results: A comparison of stock markets and investor protection for Denmark, Germany, Italy, Sweden, the UK, and US shows that the Swedish stock market is larger and more vital than would be expected from an evaluation of its formal investor protections. Subsequent analyses show that Scandinavian business standards are of the highest level, with the UK, the US, and Germany close behind, and Italy last. Comparison of owner networks using small world methodology show that whereas Germany has the most connected network, Sweden has a far tighter one than Denmark, Italy, the UK, and the US, being the least connected network of all. Theoretical Implications: The findings suggest that social norms upheld in a close network may complement formal investor protection, but perhaps not substitute for it. Thus, more research on the importance of informal governance mechanisms is called for in addition to the study of formal ones. Practical Implications: The results of this study strengthens the idea that there may not necessarily be one ideal corporate governance system, but that such systems develop historically according to path-dependent antecedents, with time finding their own balance. As such, the recent diffusion of Anglo-American corporate governance norms may prove upsetting to these systems, as their values may clash with already existing ones. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Systems, Civil Law, Insider Systems, Corporate Governance, Internal Controls, Scandanavia, Shareholders
in
Corporate Governance
volume
17
issue
1
pages
62 - 76
publisher
Wiley-Blackwell
external identifiers
  • wos:000262509700007
  • scopus:58549094373
ISSN
1467-8683
DOI
10.1111/j.1467-8683.2008.00721.x
language
English
LU publication?
yes
id
8d7003d4-9cde-4fa7-a367-0221db5a316d (old id 1312688)
date added to LUP
2009-03-13 12:52:37
date last changed
2017-09-03 04:21:32
@article{8d7003d4-9cde-4fa7-a367-0221db5a316d,
  abstract     = {Manuscript Type: Empirical Research Question/Issue: It is proposed that informal governance mechanisms such as social control, in the form of norms and corporate networks, may complement formal governance mechanisms, such as laws, in providing investor protection. Research Findings/Results: A comparison of stock markets and investor protection for Denmark, Germany, Italy, Sweden, the UK, and US shows that the Swedish stock market is larger and more vital than would be expected from an evaluation of its formal investor protections. Subsequent analyses show that Scandinavian business standards are of the highest level, with the UK, the US, and Germany close behind, and Italy last. Comparison of owner networks using small world methodology show that whereas Germany has the most connected network, Sweden has a far tighter one than Denmark, Italy, the UK, and the US, being the least connected network of all. Theoretical Implications: The findings suggest that social norms upheld in a close network may complement formal investor protection, but perhaps not substitute for it. Thus, more research on the importance of informal governance mechanisms is called for in addition to the study of formal ones. Practical Implications: The results of this study strengthens the idea that there may not necessarily be one ideal corporate governance system, but that such systems develop historically according to path-dependent antecedents, with time finding their own balance. As such, the recent diffusion of Anglo-American corporate governance norms may prove upsetting to these systems, as their values may clash with already existing ones.},
  author       = {Stafsudd, Anna},
  issn         = {1467-8683},
  keyword      = {Systems,Civil Law,Insider Systems,Corporate Governance,Internal Controls,Scandanavia,Shareholders},
  language     = {eng},
  number       = {1},
  pages        = {62--76},
  publisher    = {Wiley-Blackwell},
  series       = {Corporate Governance},
  title        = {Corporate Networks as Informal Governance Mechanisms: A Small Worlds Approach to Sweden},
  url          = {http://dx.doi.org/10.1111/j.1467-8683.2008.00721.x},
  volume       = {17},
  year         = {2009},
}