The political economy of comparative corporate governance

Contemporary research on comparative corporate governance was initially preoccupied with the question of differences in national systems of corporate governance. In recent years, however, the focus has shifted to change as some scholars argue that there are growing pressures on national systems of corporate governance to converge on a model that supports an increased focus on shareholder value, that is, a model that closely resembles the US system of corporate governance. In opposition to this view, others predict that systems of corporate governance around the world will continue to diverge. Drawing on the examples of France and Germany I show that considerable change has indeed occurred in national governance systems. Particularly important has been the growing influence of the stock market. Existing theories are inadequate for understanding the political economy of the changes that have taken place in the French and German systems of corporate governance as well as the likelihood that they will continue to evolve in the direction of shareholder value. To support this claim I focus on a common, and fundamental, deficiency in all of the theoretical approaches to the subject, that is, the weakness in their analysis of the relationship between the changing role of the stock market and the productive capabilities of particular national economies.