The Convergence of Corporate Governance Systems to European and Anglo-American Standards

Abstract

Since the mid-1990s, there has been much talk of the convergence of corporate governance systems to Anglo-American standards, and several trends have pointed in this direction. In this paper, however, Steen Thomsen argues that US/UK corporate governance is also converging to European standards through the concentration of ownership, increasing levels of insider ownership, the separation of management and control in more independent boards, the deregulation of the banking system and the increasing importance of stakeholder concerns. Support for the mutual convergence hypothesis is found in a statistical study on the evolution of ownership concentration in 2,238 companies during the 1989–1998 period. Ownership concentration, which is substantially higher in Continental Europe than in the United States and the United Kingdom, has been increasing in the United States and the United Kingdom and decreasing in Europe. However, the process is slow, and even if the observed trends were to persist, differences in corporate governance between Europe and the United States would persist for decades. Moreover, a regime change away from market governance may be under way following the collapse of the recent stock market bubble and the wave of financial scandals in the United States.