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Political Determinants of Corporate GovernancePolitical Context, Corporate Impact$
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Mark J. Roe

Print publication date: 2006

Print ISBN-13: 9780199205301

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780199205301.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 19 October 2021

Social Democracies and Agency Costs: Raising the Stakes

Social Democracies and Agency Costs: Raising the Stakes

(p.29) Chapter 4 Social Democracies and Agency Costs: Raising the Stakes
Political Determinants of Corporate Governance

Mark J. Joe

Oxford University Press

This chapter discusses social democracies and agency costs. Social democracies raised agency costs for shareholders in the public firm and the shareholders' natural reaction would have been to use an alternative organizational form that kept those costs down. The discussion looks first the effects of social democracy through codetermination, by looking at the dilemma that a family-owned firm faces when considering whether to take their firm public. Then, it looks at the effects of social democracy on agency costs and ownership structure without codetermination. The formal social-democratic institution of codetermination is not needed for social democracy to affect the public firm's internal workings, but the formal institution clearly illustrates the political effects.

Keywords:   codetermination, social democracy, family-owned firm, agency costs, ownership structure

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