European Corporate Governance Reform and the German Party Paradox. CES Germany & Europe Working Papers, No. 03.1, 2003

This paper addresses the current discussion on links between party politics and production regimes. Why do German Social Democrats opt for more corporate governance liberalization than the CDU although, in terms of the distributional outcomes of such reforms, one would expect the situation to be reversed? I divide my analysis into three stages. First, I use the European Parliament’s crucial vote on the European takeover directive in July 2001 as a test case to show that the left-right dimension does indeed matter in corporate governance reform, beside cross-class and cross-party nation-based interests. In a second step, by analyzing the party positions in the main German corporate governance reforms in the 1990s, I show that the SPD and the CDU behave “paradoxically” in the sense that the SPD favored more corporate governance liberalization than the CDU, which protected the institutions of “Rhenish,” “organized” capitalism. This constellation occurred in the discussions on company disclosure, management accountability, the power of banks, network dissolution, and takeover regulation. Third, I offer two explanations for this paradoxical party behavior. The first explanation concerns the historical conversion of ideas. I show that trade unions and Social Democrats favored a high degree of capital organization in the Weimar Republic, but this ideological position was driven in new directions at two watersheds: one in the late 1940s, the other in the late 1950s. My second explanation lies in the importance of conflicts over managerial control, in which both employees and minority shareholders oppose managers, and in which increased shareholder power strengthens the position of works councils.

Is the EU’s Governance ‘Good’?: An assessment of EU governance in its partnership with ACP States. IES WORKING PAPER 1/2010

This paper examines both the processes and outcomes of governance in the context of the EU’s relationship with ACP States within the period of the Cotonou Agreement (CA). It discusses and assesses a variety of governance mechanisms, including the European Commission’s use of the governance concept, EPAs, manifestations of partner preferences, the EDF, the revision of the CA, and Fisheries Partnership Agreements. Specific examples of the wielding of each mechanism are assessed based upon two criteria: a) the extent to which the wielding of the mechanism by the EU is a manifestation of “good governance”, and b) the extent to which the EU’s wielding of the mechanism has resulted, or is likely to result, in the sustainable development of and reduction of poverty in ACP countries. The examples are chosen to illustrate contradictions between rhetoric and practice and the consequential negative (actual and potential) impact upon development in ACP States. The final section offers suggestions for improving the EU’s governance processes and their outcomes for development.

A Legal and Economic Assessment of European Takeover Regulation. CEPS Paperbacks. December 2012

Takeovers are one-off events, altering control and strategy within an organisation. But the chances of becoming the target of a bid, even where remote, daily influence corporate decision-making. Takeover rules are therefore central to company law and the balance of power among managers, shareholders and stakeholders alike. This study analyses the corporate governance drivers underpinning takeover bid regulations and assesses the implementation of the EU Directive on takeover bids and compares it with the legal framework of nine other major jurisdictions, including the US. It finds that similar rules have different effects depending on company-level and country-level characteristics and considers the use of modular legislation and optional provisions to cater for them.

Improving decision-making in the EU. CHALLENGE EUROPE Issue 22 - Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

The multiple crises the European Union (EU) has experienced in recent years have fundamentally altered decision-making and, more broadly, governance in the EU. Pre-crisis systems and processes were not adequate to react to such critical and systemic challenges, but the speed of the crisis meant that new governance mechanisms have been superimposed on existing processes and structures rather than seeing a fundamental reform of decision-making. Consequently, not all changes have been fully successful. Given the institutional changes this year and the ongoing development of the EMU governance framework, now presents a good opportunity to reform EU decision-making.

An international study on the impact of cultural factors on the prevalence of family-owned firms. ACES Working Papers, August 2010

A key question in international corporate governance is why certain in ownership types are prevalent in different countries around the world (La Prota et al., 1999). In this study, we provide an answer for the prevalence of the family-owned firms in 42 countries by examining key characteristics of culture. We show that family-ownership is positively correlated with power distance (PD), in-group collectivism (CI) and, insignificantly, with uncertainty avoidance (UA). Our study makes a contribution to the field since previous research used religion and language as umbrella constructs for culture, while we pinpoint specific cultural dimensions.

Banking Sector Soundness, Innovation, and Development: Emerging Europe and South Asia. ACES Working Papers, 2012

While most academic and practitioner researchers agree that a country’s commercial banking sector’s soundness is a very significant indicator of a country’s financial market health, there is considerably less agreement and substantial confusion surrounding what constitutes a healthy bank in the aftermath of 2007+ financial crisis. Global banks’ balance sheets, corporate governance, management compensation and bonuses, toxic assets, and risky behavior are all under scrutiny as academics and regulators alike are trying to quantify what are “healthy, safe and good practices” for these various elements of banking. The current need to quantify, measure, evaluate, and compare is driven by the desire to spot troubled banks, “bad and risky” behavior, and prevent real damage and contagion in the financial markets, investors, and tax payers as it did in the recent crisis. Moreover, future financial crisis has taken on a new urgency as vast amounts of capital flows (over $1 trillion) are being redirected to emerging markets. This study differs from existing methods in the literature as it entail designing, constructing, and validating a critical dimension of financial innovation in respect to the eight developing countries in the South Asia region as well as eight countries in emerging Europe at the country level for the period 2001 – 2008, with regional and systemic differentials taken into account. Preliminary findings reveal that higher stages of payment systems development have generated efficiency gains by reducing the settlement risk and improving financial intermediation; such efficiency gains are viewed as positive financial innovations and positively impact the banking soundness. Potential EU candidate countries: Albania; Montenegro; Serbia

State Transformation and the European Integration Project. Lessons from the financial crisis and the Greek paradigm. CEPS Special Report No. 130/February 2016

The financial crisis that erupted in the eurozone not only affected the EU’s financial governance mechanisms, but also the very nature of state sovereignty and balances in the relations of member states; thus, the actual inequalities between the member states hidden behind their institutional equality have deteriorated. This transformation is recorded in the case law of the Court of Justice of the European Union and the member states’ constitutional courts, particularly in those at the heart of the crisis, with Greece as the most prominent example. It is the issue of public debt (sovereign debt) of the EU member states that particularly reflects the influence of the crisis on state sovereignty as well as the intensely transnational (intergovernmental) character of European integration, which under these circumstances takes the form of a continuous, tough negotiation. The historical connection between public debt (sovereign debt) and state sovereignty has re-emerged because of the financial crisis. This development has affected not only the European institutions, but also, at the member state level, the actual institutional content of the rule of law (especially judicial review) and the welfare state in its essence, as the great social and political acquis of 20th century Europe. From this perspective, the way that the Greek courts have dealt with the gradual waves of fiscal austerity measures and structural reforms from 2010 to 2015 is characteristic. The effect of the financial crisis on the sovereignty of the member states and on the pace of European integration also has an impact on European foreign and security policy, and the correlations between the political forces at both the national and European level, thus producing even more intense pressures on European social democracy. In light of the experience of the financial crisis, the final question is whether the nation state (given the large real inequalities among the EU member states) currently functions as a brake or as an engine for future European integration.

Regional health governance: a comparative perspective on EU and ASEAN. EU Centre in Singapore Policy Brief No. 4, June 2012

Globalisation has led to new health challenges for the 21st Century. These challenges have transnational implications and involve a large range of actors and stakeholders. National governments no longer hold the sole responsibility for the health of their people. These changes in health trends have led to the rise of Global Health Governance as a theoretical notion for health policy-making. The Southeast Asian region is particularly prone to public health threats and it is for this reason that this brief looks at the potential of the Association of Southeast Asian Nations (ASEAN) as a regional organisation to take a lead in health cooperation. Through a comparative study between the regional mechanisms for health cooperation of the European Union (EU) and ASEAN, we look at how ASEAN could maximise its potential as a global health actor. Regional institutions and a network of civil society organisations are crucial in relaying global initiatives for health, and ensuring their effective implementation at the national level. While the EU benefits from higher degrees of integration and involvement in the sector of health policy making, ASEAN’s role as a regional body for health governance will depend both on greater horizontal and vertical regional integration through enhanced regional mechanisms and a wider matrix of cooperation.

The Role of Market Mechanisms in a Post-2020 Climate Change Agreement. CEPS Special Report No. 87/May 2014

This special report is intended to serve as a background briefing document for the European Climate Platform seminar on Carbon Markets in the 2015 Agreement: Role and Architecture, but also raises issues of more enduring relevance in the wider debate about market mechanisms and the next climate change agreement. The paper looks at the relationship between the carbon market and a new climate change agreement, to be finalised in Paris in 2015. It tries to answer two key questions: does the carbon market have a role to play in a post-2020 agreement, and what is the role of a post-2020 agreement in the creation and operation of a carbon market? Introduction. The world has changed in many ways since 1997 when the Kyoto Protocol was adopted, along some critical axes, both from an economic and emissions points of view. Moreover, and this cannot be quantified, the appetite for global governance, especially for an agreement with such far-reaching implications as a climate change agreement, has diminished considerably. This paper looks at the relationship between the carbon market and a new climate change agreement, to be finalised in Paris in 2015. It tries to answer two key questions: does the carbon market have a role to play in a post-2020 agreement, and what is the role of a post-2020 agreement in the creation and operation of a carbon market?

Sustainable Development and Collective Learning: Theory and a European Case Study. Bruges European Economic Policy (BEEP) Briefing 7/2004

Network governance of collective learning processes is an essential approach to sustainable development. The first section of the article briefly refers to recent theories about both market and government failures that express scepticism about the way framework conditions for market actors are set. For this reason, the development of networks for collective learning processes seems advantageous if new solutions are to be developed in policy areas concerned with long-term changes and a stepwise internalisation of externalities. With regard to corporate actors’ interests, the article shows recent insights from theories about the knowledge-based firm, where the creation of new knowledge is based on the absorption of societal views. This concept shifts the focus towards knowledge generation as an essential element in the evolution of sustainable markets. This involves at the same time the development of new policies. In this context innovation-inducing regulation is suggested and discussed. The evolution of the Swedish, German and Dutch wind turbine industries are analysed based on the approach of governance put forward in this article. We conclude that these coevolutionary mechanisms may take for granted some of the stabilising and orientating functions previously exercised by basic regulatory activities of the state. In this context, the main function of the governments is to facilitate learning processes that depart from the government functions suggested by welfare economics.

Enhancing the Legitimacy of EMU Governance. CEPS Special Report No. 98/December 2014

This CEPS Special Report investigates ways to enhance the legitimacy of economic governance in the Economic and Monetary Union (EMU) without introducing Treaty changes. It suggests changes in the governance framework at both the institutional and economic level. Input-oriented legitimacy can be improved by increasing parliamentary oversight on decisions related to EMU and increasing the accountability of the Eurogroup. Output-oriented legitimacy can be improved by strengthening the ability of EMU to reduce the emergence of negative externalities and to mitigate their impact, through market and fiscal risk-sharing mechanisms.