Arbeitspapier
The Political Economy of Dominant Investors
We allow the preference of a political majority to determine boththe corporate governance structure and the division of profits betweenhuman and financial capital. In a democratic society where financialwealth is concentrated, a political majority may prefer to restraingovernance by dispersed equity investors even if this reduces profits.The reason is that labor claims are exposed to undiversifiable risk, sovoters with small financial stakes may prefer lender (or large share-holder) dominance, as they choose lower risk strategies. The modelmay explain the great reversal phenomenon in the first half of the20th century (Rajan and Zingales, 2003), when some financially verydeveloped countries moved towards bank or state control as a finan-cially weakened middle class became concerned about income risk.We offer evidence using post WW1 inflationary shocks as the sourceof identifying exogenous variation.
- Language
-
Englisch
- Bibliographic citation
-
Series: Tinbergen Institute Discussion Paper ; No. 04-091/2
- Classification
-
Wirtschaft
Financial Institutions and Services: Government Policy and Regulation
Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- Subject
-
government policy and regulation
capital budgeting
investment policy
financing policy
capital and ownership structure
mergers
acquisitions
restructuring
corporate governance
Corporate Governance
Finanzintermediation
Bank
Medianwähler-Modell
Ökonomische Theorie der Demokratie
- Event
-
Geistige Schöpfung
- (who)
-
Perotti, Enrico C.
von Thadden, Ernst-Ludwig
- Event
-
Veröffentlichung
- (who)
-
Tinbergen Institute
- (where)
-
Amsterdam and Rotterdam
- (when)
-
2004
- Handle
- Last update
-
10.03.2025, 11:46 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Perotti, Enrico C.
- von Thadden, Ernst-Ludwig
- Tinbergen Institute
Time of origin
- 2004
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The Political Economy of Commitment to Policies
The Political Economy of Bank- and Market Dominance
The Political Economy of a Diverse Monetary Union
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Proprietary Trading and the Real Economy
Outside Finance, Dominant Investors and Strategic Transparancy
The Political Economy of Finance
Resource Extraction in a Political Economy Framework
The Political Economy of Regionalism
The Political Economy of Financial Fragility
The Political Economy of Corporate Control
The Political Economy of Financial Systems
The Political Economy of Commitment to Policies
The Political Economy of Bank- and Market Dominance
The Political Economy of a Diverse Monetary Union
New Economy, Old Central Banks?
Proprietary Trading and the Real Economy
Outside Finance, Dominant Investors and Strategic Transparancy
The Political Economy of Finance
Resource Extraction in a Political Economy Framework
The Political Economy of Regionalism
The Political Economy of Financial Fragility
The Political Economy of Corporate Control
The Political Economy of Financial Systems
The Political Economy of Commitment to Policies
The Political Economy of Bank- and Market Dominance
The Political Economy of a Diverse Monetary Union
New Economy, Old Central Banks?