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This chapter puts the historical analysis offered by the book into contemporary context. The reader will find out the UK differs from most other industrialized countries in that ownership (in the sense of ownership of shares) is separated from control (having the authority to manage) and that concerns about the adequacy of managerial accountability have dominated debates concerning corporate governance in the UK. While the relevant empirical data offers at best a partial picture of how ownership and control evolved over time, there is sufficient evidence to organize the chronology into distinct periods, around which Chapters 5 to 11 are organized. The chapter acknowledges that the book's treatment of relevant issues is not definitive but argues that the book offers readers various insights concerning the timing of the divorce between ownership and control, the multi-causal nature of the split, the law's role and the durability of current arrangements.

This chapter criticizes current contractarian views of the firm in law and economics, reminding that the forgotten merit of the corporate form of enterprise is precisely the separation between individual investors/claimants and the firm as a juridical person and separate entity, that is not ‘owned’ by either investors, nor managers, nor any other participant in the enterprise. Furthermore, it is argued — and corroborated with historical evidence on the emergence of corporate law in the US and on the case of Singer — that shareholders themselves ‘are better off because they have, in the corporation, a mechanism for committing capital to an enterprise and yielding control rights to directors almost irrevocably’. In other terms, the separation of ownership and control, rather than being ‘a problem’ and in spite of entailing some costs, is the very virtue of the corporate form. The chapter concludes with a review of implications for devising effective institutions, especially in transition economies.

The structure of Austrian corporate governance has been largely unexplored. This is partly due to the complex structure of the system and partly due to the difficulty in obtaining data. This paper therefore represents a first step towards a systematic analysis of corporate governance in Austria. The focus of this study is on the separation of ownership and control of Austrian firms.

This chapter summarizes stylized facts on corporate ownership and control structures around the world and their impact on managerial decisions and firm performance. Recent literature suggests that family control and pyramidal business groups are the two distinct organizational characteristics prevalent outside the United States and the United Kingdom. An important explanatory factor is the quality of investor protection, which determines the degree of private benefit extraction by the controlling party. Pyramidal business groups extend the boundaries of a firm beyond a single legal entity, raising challenges in disentangling group-level effect from other firm-level factors.

This chapter examines the significance of diverse patterns of ownership and control for regulating conflicts between majority and minority shareholders. It explores arguments for and against the regulation of related party transactions. It examines the Parmalat scandal and the mechanisms employed by the family-controlling shareholders to extract private benefits of control at the expense of minority shareholders and creditors. The legal rules and institutions designed to regulate related party transactions are analysed and discussed. The chapter looks at the legal mechanisms used to hide identity of the beneficial owner and critically assess the efforts of international bodies to pierce through the corporate veil. It concludes by assessing the important insights explored here and discussing the various reforms that policy-makers may wish to consider when approaching the regulation of related party transactions and beneficial ownership.

This chapter considers laws pertaining to agency relationships, organizational contracts, and private property, which count as an additional set of legal foundations for the construction, growth, and management of firms. Various economic theories of the firm that have emphasized one or another of these elements are discussed in passing. The chapter shows that legal theory can explain how these disparate elements fit together to compose the panoply of real-world business firms today. The chapter also discusses modern revolutions in both corporate law and finance that have led to a radical fragmentation of the ownership and control of firms, leading to important roles in firm governance played by managing boards and financial investors. The chapter emphasizes the influence of debt financing, retained earnings, and complex organizational structures (such as holding companies and corporate pyramids).

This chapter considers one major aspect of the heterogeneous responses of cultural and political elites to the rise of the media and burgeoning entertainment industry. It focuses on efforts, above all through means of state regulation, to reassert elite values and standards by establishing a formal framework of control over popular culture, including literary and film censorship as well as state ownership of broadcasting. While the censorship of cultural forms as a means of social control was of course nothing new at the time, the avowedly commercial orientation of most popular amusements and their unprecedented dissemination via new communications technologies elicited a new brand of cultural interventionism among the educated elite, a belief not only in their ability to improve the tastes and cultural practices of the masses, but indeed in their right — even duty — to do so.

The Takeover Directive is based on the view that takeovers should be encouraged as an instrument for EU company restructuring plans. Takeovers have even been considered to be a ‘condition for the survival’ of European undertakings within the context of international competition and a condition for the establishment of a European financial market. This chapter is organized as follows. Section II gives a description of the Directive and its aims and limits, with particular reference to the so-called breakthrough rule. Section III presents different European mechanisms of ownership control, based on the 2007 Report on the Proportionality Principle. Section IV discusses the system of multiple voting rights as applied in the Nordic countries, using Sweden as example, while Section V concludes.

This chapter focuses on managerial capitalism, which prevailed in large American public companies from the end of World War II until the 1980s. The chapter opens by summarizing managerial capitalism’s key features. Managerial capitalism’s rise to prominence is explored next. The superseding of “financial capitalism” is described and reasons that a divorce between the ownership of shares and managerial control became the norm in large firms are canvassed. The remainder of the chapter describes the nature of managerial capitalism during its 1950s and 1960s heyday. Particular emphasis is placed on explaining why corporate wrongdoing was a rarity despite seemingly wide discretion being bestowed upon public company executives.

This chapter studies technological innovation from a “micro” perspective, examining how the power to exploit information is distributed across the principal–agent relationship between firms during innovation. This chapter shows that firms in liberal market economies prefer “control” over their agents, and obtain R&D from divisions under their own ownership hierarchy; by contrast, firms in strategically coordinated capitalism prefer “discretion” by their agents, and obtain R&D from independent contractors. The choice between control and discretion directly affects how varieties of capitalism manage the risks of volatility. As the chapter shows, firms in liberal market economies face a binding tradeoff between low volatility and high innovation output: the achievement of one goal undermines the other. For firms in coordinated economies, by contrast, these two goals are jointly achievable, even in cases of radical innovation.

This chapter debunks the conventional wisdom that the primary function of the stock market is to be a value-creating institution, raising cash for corporations by pointing to the fact that the separation of ownership and control in the past occurred because of a managerial constraint, not a capital constraint, as well as the fact that, throughout the twentieth century and continuing in the twenty-first century, the U.S. stock markets have been net extractors of money from the corporate sector. The chapter explains the five general functions of the stock market: Control; Cash; Creation; Combination; and Compensation. It then analyzes how a broad adoption of the MSV view changed the relative importance of those functions and eventually brought about the imbalance between value creation and value extraction.

This chapter extends the analysis of models of hydrocarbon management by considering their implementation via fiscal systems as a specific strand of state policy. This chapter combines academic and industry literature to examine the four main approaches to state resource management and their association with the ‘development status’ of a country (Kaiser and Pulsipher, 2004; 2006). Attention is paid to the influence of ideology on the four approaches, particularly in relation to how the models originate from varying perspectives of state resource ownership and control. The chapter considers the utilisation of these types of fiscal systems in a range of countries and discusses their outcomes in the form of ‘rent’ or ‘government take’. Utilising secondary data from several international studies of ‘government take’, the chapter emphasises how Ireland's model of resource management is unique both in terms of it being a licensing system (used in less than half the countries with hydrocarbon production worldwide) and its very low rates of government take (one of the lowest in the world). Thus, this chapter underscores the distinctiveness of the Irish model, raising further questions around why Ireland's approach is quite exceptional - answers to which are provided in the following chapter.

The seventh and concluding chapter of The Public Company Transformed extrapolates from trends the previous chapters have identified to speculate on the future trajectory of the public company. Salient developments from the 2010s are taken into account, with particular emphasis being placed on those implying a path different from what would be anticipated given events occurring from the mid-twentieth century through to the opening decade of the twenty-first century. This chapter argues radical departures from present day arrangements are unlikely any time soon. For instance, recent predictions of the imminent demise of the public company appear to be wide of the mark. That means the transformation of the public company the book has described should end up being part of a larger story yet to be written rather than being a public company epitaph.

Modern corporations are characterized by the separation of ownership and control, with individual investors spreading their wealth over a large number of separate firms. This allows specialist managers to use their skills to run firms and individual investors to enjoy the benefits of diversifying the risks they face. Shareholders are able to influence the way firms are run by sponsoring proposals that are put to a shareholder vote, but few do so because they cannot share the costs of monitoring management with other shareholders and they must share the benefits with them. This chapter explains the source and consequences of the resulting free-rider problem using the example of gadfly investor Evelyn Y. Davis who, because of the personal benefits she earned from monitoring, spent decades creating havoc at firms’ annual shareholder meetings.

Summarising the book's contents, this chapter argues that Ireland's approach to the management of its gas and oil is fundamentally flawed and unless modified, will continue to cause difficulties in relation to the Corrib gas conflict and other areas which face potential hydrocarbon exploration and production. Although Irish state hydrocarbon management can be interpreted as an outcome of a state functioning within neoliberal capitalism, the state's approach has been moulded in particular ways by the specific factors outlined in chapter nine. Therefore, tangible elements of the state's approach can be altered in order to eradicate weaknesses and maximise advantages for citizens of Ireland as the owners of the gas and oil. This book concludes with a series of empirically grounded recommendations around how the Irish model can be transformed to ensure lasting benefits for Irish society. These novel and previously unpublished recommendations are organised by three main topics which are problematic: ownership, control and production of resources; issues within the State; public debate and research. By offering informed recommendations, I outline a blueprint for an alternative framework for Irish state hydrocarbon management thereby going beyond academic considerations to outlining a possible strategy for change.

This chapter considers the “managerial” approach to the corporation by unpacking Berle and Means’s famous argument about the problems of the modern corporation. This approach is important because it has proven influential in its own right; the “separation of ownership from control” that Berle and Means famously observed, and the resulting power and discretion that managers enjoy, has been an important trope for critics of corporate capitalism. It is also important because it represents precisely the kind of analysis that the Chicago school’s theory of the corporation was meant to counter. The chapter concludes by contextualizing Berle and Means’s account within political theory more generally.