Boards and shareholders in European listed companies. Facts, context and post-crisis reforms

In recent years, the academic debate focused on the relationship between Corporate Governance and the financial crisis. It is still unclear whether, and to what extent, dysfunctional corporate governance has contributed to the recent financial crisis. Nonetheless, a number of policy proposals have been put forward to redress the most obvious failures. In particular, the European Commission published two Green Papers, in 2010 and 2011 respectively, targeting corporate governance in financial institutions and remuneration policies and the EU corporate governance framework. In December 2012, on the basis of its reflection and of the results of previous consultations, the European Commission published an Action Plan outlining future initiatives in the areas of European company law and corporate governance. This volume analyses four main topics in the corporate governance of European listed firms: (i) board structure and composition and their interaction with ownership structure; (ii) board remuneration; (iii) shareholder activism and (iv) corporate governance disclosure based on the “comply or explain” approach. For each of them, the Authors provide new evidence and analyze its implications for the policy debate. In the main, they challenge the conventional wisdom that corporate governance in European firms was systematically dysfunctional and, therefore, they suggest caution in bringing forward regulatory changes. Basically, while proposals aimed at increasing disclosure and accountability are usually well-grounded, caution is needed with respect to proposals targeting specific governance arrangements (especially in the fields of board composition and shareholder activism). Similarly, they argue that the “comply or explain” principle should be retained but further efforts should be exercised to enhance disclosure.