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Corporate governance in Scandinavia: comparing networks and formal institutions
Author(s) -
Sinani Evis,
Stafsudd Anna,
Thomsen Steen,
Edling Christofer,
Randøy Trond
Publication year - 2008
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1057/emr.2008.1
Subject(s) - corporate governance , enforcement , reputation , politics , accounting , accountability , business , rule of law , control (management) , language change , government (linguistics) , political science , economics , law , finance , management , art , linguistics , philosophy , literature
This article addresses the role of formal institutions and informal networks on corporate governance practices. The existing corporate governance literature has mostly examined the formal institutions, such as the effect of legal systems. Our contribution is to consider the effect of informal ‘small world’ characteristics of ownership and board networks. We use the case of Scandinavia (Denmark, Norway and Sweden) to examine these effects. Our empirical results reveal large differences in formal board and ownership structures between the Scandinavian countries, but strong similarities in terms of law enforcement, political stability, government effectiveness, rule of law, control of corruption as well as voice and accountability. We find that all three countries can be characterized as ‘small worlds' in which trust, information diffusion and reputation mechanisms are active governance mechanisms.