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

Abstract

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

Charreaux, Gerard, Beyond the Law and Finance Approach: The Shareholders' Cognitive Role and its Effects on the Analysis of Ownership Structure and Corporate Governance (July 2002). Universite de Bourgogne - Fargo Working Paper No. 020701, Available at SSRN: https://ssrn.com/abstract=486502 or http://dx.doi.org/10.2139/ssrn.486502

Gerard Charreaux (Contact Author)

Universite de Bourgogne - LEG/FARGO ( email )

2, Bd Gabriel, BP 26611
Pole d'economie et de gestion
Dijon Cedex, 21066
France
33380395435 (Phone)
33380395488 (Fax)

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