Does Company Ownership Matter? – Edited by J. Touffut

• Author: Lineke Sneller
• Published date: 01 November 2010
• Date: 01 November 2010
• DOI: http://doi.org/10.1111/j.1467-8683.2010.00812.x

Book Reviewcorg_812575..576

Touffut, J. (Ed.), Does Company Ownership Matter? Edward Elgar Limited, Cheltenham, 2009,

ISBN 978-1-84844-796-7

The central subject of Touffut’s Does Company Ownership

Matter? is the distribution of decision rights in compa-

nies. The model of shareholder primacy prevailing in the US

is contrasted with other models of distribution of rights that

are more common in Western European countries. Topics

studied are the impact of ownership on shareholder value

and macroeconomic performance, the roles of states and

institutions as regulators and owners, and the distribution

of ownership and decision rights between shareholders,

directors, employees and other stakeholders. The recent

worldwide banking crisis and the resulting state influence

on banks, as well as the reconciliation of company law

required by the European unification make this book very

topical. The origin of the contributions to the book is a con-

ference organized by the Cournot Centre for Economic

Studies held in 2007 on company ownership, that brought

together internationalexperts from universities, governmen-

tal agencies, law firms, banks, and research centers. Accord-

ing to its president Robert Solow, the “aims of the centre are

to bring together: 1) an issue of economic policy that is

currently being discussed and debated in Europe and 2) the

relevant theoretical and empirical findings of serious eco-

nomic research in universities, think-tanks, and research

bureau.”

The book has six chapters. The first two are empirical

studies in which aspects of ownership are researched. In the

first of those, Carlin contrasts two views of ownership,

leading to two possible directions for corporate governance

reforms. In the first view, these reforms lead to world-wide

convergence in ownership structures, while in the second

view, ownership structures depend on the activities of the

firm and therefore are country-specific and divergent. Based

on evidence from North America, Europe, Asia, and the

Pacific, the author shows that divergence cannot be ruled

out. In the second chapter, Gatti studies the relationship

between unemployment and productivity on the one hand,

and employment protection legislation and shareholder

ownership concentration on the other hand. She uses a

sample of 18 countries on four continents for the years

between 1980 and 2004. Her results indicate that more own-

ership concentration reduces unemployment and favors

growth.

Two chapters focus on France. In the first of those on the

effect of stock market listing on HRM practices in compa-

nies, Deaking and Réberioux compare France and the UK.

For France, a country with strong labor protection laws,they

find that listed companies use labor agencies more often

than non-listed companies and their average workforce is

smaller. For this smaller workforce, high commitment HRM

practices are in place in listed companies: wages are higher,

more is spent on training per employee and performance

related pay is used more frequently than in non-listed com-

panies. For the UK, a country with weak labor protection

laws, the authors find evidence that companies are less

inclined to adopt high commitment HRM practices.

In the second chapter focusing on France, Beffa, and

Ragot describe the evolution of shareholdings in the past 25

years, which are characterized by decreasing state owner-

ship and more interdependence between listed companies

through cross shareholding. The authors state that this evo-

lution has allowed French companies to benefit from inter-

nationalization of trade and opportunities for development.

They also see risks for short-termism of activist sharehold-

ers, and advise the French state to use their regulatory and

investment powers to encourage long-term development of

companies.

The remaining two chapters in the book are more norma-

tive. Clerc, in his chapter on the legitimacy of shareholder

power, states that the state has the legitimacy to intervene in

the shareholder primacy model, because this model is not a

balanced solution for all stakeholders. He argues that

reforms are required for reasons of efficiency, justice, or

pluralism, and he advocates a distribution of power

between shareholders, the board of directors, and other

stakeholders like banks. In his view, history shows that com-

panies are indebted to the public authorities, and that com-

panies should be governed by rules that remain in keeping

with the interests of society.

In the last chapter of the book, Sacconi presents a norma-

tive model for corporate social responsibility, which he

defines as a model of extended corporate governance based

on the stakeholder approach rather than on the shareholder

approach. The core of his model is a social contract between

all stakeholders that will lead to a negotiated equilibrium.

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Corporate Governance: An International Review, 2010, 18(6): 575–576

© 2010 Blackwell Publishing Ltd

doi:10.1111/j.1467-8683.2010.00812.x