Abstract
We investigate the extent to which the United States and the countries of Europe have achieved economic convergence of their corporate sector. We define convergence as the homogenization of economic performance, institutional arrangements, and market valuation taking place at the meso-economic level. We perform a cluster analysis along industry lines and find that industries and corporations on both continents cluster in four groups, based on six variables measuring operating performance, ownership, and market valuation. The clusters resulted from the US data are more unstable than those resulted from European data. We are also able to pair a handful of highly similar clusters between the US and European data. These findings suggest a complex dynamic. It seems that the US corporate sector is more homogeneous than the European one. Moreover, some degree of convergence between the European Union and the United States appears to have already occurred.
Highlights
Corporate performance and corporate governance convergence has been studied from a multitude of angles
We set out to assess the degree of corporate performance and corporate governance convergence within the US, within Europe, and between the US and Europe
In the context of the current research, we define economic integration and convergence as a phenomenon occurring at the so-called ”meso-economic” level [9]; that is, we interpret it as the emerging tendency of corporations on both continents to achieve similar economic linkages, similar levels of operating performance, ownership characteristics, and valuation; all this along industry lines
Summary
Corporate performance and corporate governance convergence has been studied from a multitude of angles. We set out to assess the degree of corporate performance and corporate governance convergence within the US, within Europe, and between the US and Europe. In the context of the current research, we define economic integration and convergence as a phenomenon occurring at the so-called ”meso-economic” level [9]; that is, we interpret it as the emerging tendency of corporations on both continents to achieve similar economic linkages, similar levels of operating performance, ownership characteristics, and valuation; all this along industry lines. Instead of focusing on describing institutional arrangements and their relationship to individual metrics of corporate performance, we use clustering analysis to assess the overall complexity and structural similarity of six metrics of operating performance and valuation across various industries
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