The Transnational Politics of Corporate Governance Regulation

This ambitious volume explores the politics of recent changes in corporate governance regulation and the transnational forces driving the process. Corporate governance has in the 1990s become a catchphrase of the global business community. The Enron collapse and other recent corporate scandals, as well as growing worries in Europe about the rise of Anglo-Saxon fi nance, have made issues of corporate governance the subject of political controversies and of public debate. These debates often overlook the role of public and private regulation in producing a power shift within corporate governance practices at multiple levels.

This book argues that the regulation of corporate governance is an inherently political affair. Given the context of the deepening globalization of the corporate world, it is also increasingly a transnational phenomenon. In terms of the content of regulation the book shows an increasing reliance on the application of market mechanisms and a tendency for corporations themselves to become commodities, ‘things’ which can be sold and bought on the market. The emerging new mode of regulation is characterized by increasing informalization and by forms of private regulation. These changes in content and mode are driven by transnational actors, fi rst of all the owners of internationally mobile fi nancial capital and their functionaries such as coordination service fi rms, as well as by key public international agencies such as the European Commission.

This book will be of interest to students and researchers of international political economy, politics, economics and corporate governance.

Henk Overbeek is Professor of International Relations in the Department of Political Science of the Vrije Universiteit Amsterdam, The Netherlands.

Bastiaan van Apeldoorn is a Reader in International Relations at the Vrije Universiteit Amsterdam, The Netherlands.

Andreas Nölke is Professor of Political Science at the Institut für Politikwissen-schaft of the Johann Wolfgang Goethe-Universität, Frankfurt am Main, Germany.

RIPE series in global political economy

Series Editors: Louise Amoore (University of Newcastle, UK ), Randall Germain (Carleton University, Canada) and Rorden Wilkinson (University of Manchester, UK )

Formerly edited by Otto Holman (University of Amsterdam), Marianne Marchand (Universidad de las Américas-Puebla), Henk Overbeek (Free University, Amsterdam) and Marianne Franklin (University of Amsterdam)

The RIPE series editorial board are:

Mathias Albert (Bielefeld University, Germany), Mark Beeson (University of Queensland, Australia), A. Claire Cutler (University of Victoria, Canada), Marianne Franklin (University of Amsterdam, the Netherlands), Stephen Gill (York University, Canada), Jeffrey Hart (Indiana University, USA), Eric Helleiner (Trent University, Canada), Otto Holman (University of Amsterdam, the Netherlands), Marianne H. Marchand (Universidad de las Américas-Puebla, Mexico), Craig N. Murphy (Wellesley College, USA), Robert O’Brien (McMaster University, Canada), Henk Overbeek (Vrije Universiteit, the Netherlands), Anthony Payne (University of Sheffi eld, UK ) and V. Spike Peterson (University of Arizona, USA).

This series, published in association with the Review of International Political Economy, provides a forum for current debates in international political economy. The series aims to cover all the central topics in IPE and to present innovative analyses of emerging topics. The titles in the series seek to transcend a state-centred discourse and focus on three broad themes:

the nature of the forces driving globalisation forwardresistance to globalisationthe transformation of the world order.

The series comprises two strands:

The RIPE Series in Global Political Economy aims to address the needs of students and teachers, and the titles will be published in hardback and paperback. Titles include:

•••

Transnational Classes and International RelationsKees van der Pijl

Gender and Global RestructuringSightings, Sites and ResistancesEdited by Marianne H. Marchand and Anne Sisson Runyan

Global Political EconomyContemporary TheoriesEdited by Ronen Palan

Ideologies of GlobalizationContending Visions of a New World OrderMark Rupert

The Clash within CivilisationsComing to Terms with Cultural Confl ictsDieter Senghaas

Global Unions?Theory and Strategies of Organized Labour in the Global Political EconomyEdited by Jeffrey Harrod and Robert O’Brien

Political Economy of a Plural WorldCritical Refl ections on Power, Morals and CivilizationsRobert Cox with Michael Schechter

A Critical Rewriting of Global Political EconomyIntegrating Reproductive, Productive and Virtual EconomiesV. Spike Peterson

Contesting GlobalizationSpace and Place in the World EconomyAndré C. Drainville

Global Institutions and DevelopmentFraming the World?Edited by Morten Bøås and Desmond McNeill

Global Institutions, Marginalization, and DevelopmentCraig N. Murphy

Critical Theories, International Relations and ‘the Anti-Globalisation Movement’The Politics of Global ResistanceEdited by Catherine Eschle and Bice Maiguashca

Globalization, Governmentality, and Global PoliticsRegulation for the Rest of Us?Ronnie D. Lipschutz, with James K. Rowe

Routledge/RIPE Studies in Global Political Economy is a forum for innovative new research intended for a high-level specialist readership, and the titles will be available in hardback only. Titles include:

1. Globalization and Governance*Edited by Aseem Prakash and Jeffrey A. Hart

2. Nation-States and MoneyThe Past, Present and Future of National CurrenciesEdited by Emily Gilbert and Eric Helleiner

3. The Global Political Economy of Intellectual Property RightsThe New Enclosures?Christopher May

4. Integrating Central EuropeEU expansion and Poland, Hungary and the Czech RepublicOtto Holman

5. Capitalist Restructuring, Globalisation and the Third WayLessons from the Swedish ModelJ. Magnus Ryner

6. Transnational Capitalism and the Struggle over European IntegrationBastiaan van Apeldoorn

7. World Financial OrdersAn Historical International Political EconomyPaul Langley

8. The Changing Politics of Finance in Korea and ThailandFrom Deregulation to DebacleXiaoke Zhang

9. Anti-Immigrantism in Western DemocraciesStatecraft, Desire and the Politics of ExclusionRoxanne Lynn Doty

17. Resisting Intellectual PropertyDebora J. Halbert

18. Neoliberal HegemonyA Global CritiqueEdited by Dieter Plehwe, Bernhard Walpen and Gisela Neunhöffer

19. Global Standards of Market CivilizationEdited by Brett Bowden and Leonard Seabrooke

20. Beyond GlobalizationCapitalism, Territoriality and the International Relations of ModernityHannes Lacher

21. Images of GramsciConnections and Contentions in Political Theory and International RelationsEdited by Andreas Bieler and Adam David Morton

22. Global Public PolicyBusiness and the Countervailing Powers of Civil SocietyEdited by Karsten Ronit

23. The Transnational Politics of Corporate Governance RegulationEdited by Henk Overbeek; Bastiaan van Apeldoorn, and Andreas Nölke

* Also available in paperback

10. The Political Economy of European EmploymentEuropean Integration and the Transnationalization of the (Un)Employment QuestionEdited by Henk Overbeek

11. Rethinking Global Political EconomyEmerging Issues, Unfolding OdysseysEdited by Mary Ann Tétreault, Robert A. Denemark, Kenneth P. Thomas and Kurt Burch

12. Rediscovering International Relations TheoryMatthew Davies and Michael Niemann

13. International Trade and Developing Countries*Bargaining Coalitions in the GATT & WTOAmrita Narlikar

14. The Southern Cone ModelThe Political Economy of Regional Capitalist Development in Latin AmericaNicola Phillips

15. The Idea of Global Civil SocietyPolitics and Ethics of a Globalizing EraEdited by Randall D. Germain and Michael Kenny

16. Governing Financial GlobalizationInternational Political Economy and Multi-Level GovernanceEdited by Andrew Baker, David Hudson and Richard Woodward

The Transnational Politics of Corporate Governance Regulation

Edited by Henk Overbeek, Bastiaan van Apeldoorn and Andreas Nölke

First published 2007by Routledge2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

Simultaneously published in the USA and Canadaby Routledge270 Madison Ave, New York, NY 10016

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2007 Henk Overbeek, Bastiaan van Apeldoorn and Andrew Nölke

Typeset in Times New Roman by HWA Text and Data Management, Tunbridge Wells Printed and bound in Great Britain by?APrinter Ltd

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

British Library Cataloguing in Publication DataA catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication DataA catalog record for this book has been requested

ISBN10: 0–415–43172–7 (hbk)ISBN10: 0–203–94668–5 (ebk)

ISBN13: 978–0–415–43172–9 (hbk)ISBN13: 978–0-–203–94668–8 (ebk)

Contents

List of illustrations xList of contributors xiiPreface xvAcknowledgements xviiiList of abbreviations xx

1 The transnational politics of corporate governance regulation:introducing key concepts, questions and approaches 1BASTIAAN VAN APELDOORN, ANDREAS NÖLKE AND HENK OVERBEEK

PART I

Themes and approaches 25

2 Explaining corporate governance systems: alternative approaches 27PETER GOUREVITCH

3 Regulation- and state-theoretical perspectives on changes in corporate governance and metagovernance 43BOB JESSOP

4 The paradoxical nature of shareholder primacy: a re-consideration of the Enron-era fi nancial scandals in the US and the EU 59ANTOINE REBÉRIOUX

viii Contents

PART II

European corporate governance regulation and the politics of marketization 75

5 The transformation of corporate governance regulation in the EU: from harmonization to marketization 77BASTIAAN VAN APELDOORN AND LAURA HORN

6 Towards a market-based approach: the privatization and micro-economization of EU antitrust law enforcement 98ANGELA WIGGER

PART III

The role of private authority in corporate governance regulation 119

7 Coordination service fi rms and the erosion of Rhenish capitalism 121ANDREAS NÖLKE AND JAMES PERRY

8 The role of private actors in global governance and regulation: US, European and international convergence of accounting and auditing standards in a post-Enron world 137IAN DEWING AND PETER RUSSELL

PART IV

Integrating emerging market economies 153

9 Transition through different corporate governance structures in postsocialist economies: which convergence? 155WLADIMIR ANDREFF

10 Corporate governance regulation in East Central Europe: the role of transnational forces 177ARJAN VLIEGENTHART AND HENK OVERBEEK

Contents ix

PART IV

Conclusion 199

11 Marketization, transnationalization, commodifi cation, and the shifts in corporate governance regulation: a conclusion 201ANDREAS NÖLKE, HENK OVERBEEK AND BASTIAAN VAN APELDOORN

Bibliography 220Index 250

Illustrations

Figures

2.1 Casual schema 32 2.2 Poltical cohesion and shareholder protections 37 7.1 A theoretical model for the analysis of coordination service

fi rms 128 11.1 Convergence, divergence and common trajectories 205

Tables

1.1 The relationship between corporate governance regulation and practice 5

1.2 Multiple arenas of corporate governance regulation 6 1.3 Alternative conceptualizations of the content of corporate

governance regulation 15 2.1 Ownership concentration 28 2.2 Minority shareholder protections index 31 2.3 Political coalitions and governance outcomes 33 9.1 Major privatization methods in transition economies 160 9.2 Corporate governance structures in East European enterprises 161 9.3 Inward foreign direct investment in transition economies,

1993–2002 172 9.4 Small and medium-sized enterprises in Central and Eastern

Europe, 1995 173 10.1 Inward and outward FDI fl ows as percentage of gross fi xed capital

formation 184 10.2 Inward FDI stock as a percentage of GDP, by host region and

economy 185 10.3 Foreign bank assets as share of commercial bank assets (A) and

as % of GDP (B) 186 10.4 Penetration ratios of majority-owned foreign bank affi liates in

banking, 2001 186

List of illustrations xi

10.5 Ownership structure measured after assets of the largest ten banks in the Accession-8 187

10.6 Mode, pace and institutional setting of the privatization process 192 10.7 Main corporate governance features in ECE 194