Beyond the Law and Finance Approach: The Shareholders' Cognitive Role and its Effects on the Analysis of Ownership Structure and Corporate Governance
Universite de Bourgogne - Fargo Working Paper No. 020701
38 Pages Posted: 16 Jan 2004
Date Written: July 2002
The dominant law and finance approach of ownership structure and corporate governance is based on an unrealistic assumption, that of a total complete separation between ownership and control, in particular in the European nations. This approach based on the seminal Berle and Means' analysis and on agency theory, postulates that shareholders carry only a financial function limited to equity financing and assumption of financial risk. In view of the actual ownership structures, this approach has a weak explanatory power. Therefore, this article proposes another model, based on the cognitive role - directing and contribution of competences -, that the main shareholders often keep. It is possible to consider this model as a component of a corporate governance theory extended to cognitive variables.
Note: Downloadable document is in French.
Keywords: shareholders' cognitive role, capital structure, corporate governance
JEL Classification: G300
Suggested Citation: Suggested Citation