The ?Ignored? Third Dimension of Corporate Governance

The ?Ignored? Third Dimension of Corporate Governance

Joseph McCahery, Erik Vermeulen

Series number :

Serial Number: 

Date posted :

January 01 2014

Last revised :

January 31 2014
SSRN Share


  • controlling ownership • 
  • Corporate governance • 
  • innovation • 
  • investor relations • 
  • shareholder value • 
  • widely dispersed ownership
The separation of ownership and control has always been central in corporate governance debates. A large body of literature has sought to show that control-enhancing arrangements can deter investors. However, the experience of the last few years has suggested that companies with widely dispersed ownership can suffer from their own issues ? not least short-termism.
So, is ownership structure really the dividing line between ?good? and ?bad? governance that many commentators suggest? This short essay suggests that policymakers, academics and practitioners should be careful in deriving conclusions about the most effective ownership and control structures. Ownership is firm-specific and varies across life cycle stages, sectors, regions, countries and cultures. Ownership structures are also dynamic in that they (should) change over time according to evolving markets and shifting business strategies and practices.


Research Member
Tilburg University Faculty of Law and Tilburg Law and Economics Center