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Anglo-American and European Models
SESSION III
Which Model Works Better Contrasting Anglo-American and European Models
Professor Colin
Mayer
Peter Moores
Professor of
Finance, Saïd
Business School,
University of
Oxford
There is considerable
debate on this subject,
taking as its
background the observation
that there appear, at
least superficially, to be
significant differences
across countries in terms
of the structure of their
corporations and the way in which corporations
are governed. At one end of the spectrum is the
“Continental European model,” which is actually
is applicable to most countries in the world, in
which ownership is dominated by large shareholders
or blocks of shares held by particular
investors. Graph 1 below records the holdings in
excess of fifty percent in listed companies in a
variety of countries, showing the proportion of
listed companies in those countries in which
there is a single shareholder which holds more
than fifty percent of shares in a company.
The graph records that in countries like
Austria, Belgium, Germany and Italy, in more
than fifty percent of listed companies there is a
single majority shareholder. In contrast if you
look at the UK, there is a single majority shareholder
in only two percent of listed companies; in
the US its about the same.
It is even more striking on Graph 2, if you
look at the proportion of companies in which
there is a single shareholder with a minority
blocking control in a company, with more than
twenty-five percent of shares.
In continental European countries, in more
than eighty percent or in some cases more than
ninety percent of companies there is such a
shareholder, whereas in the UK it is around
about fifteen percent, and in the US it is 5-8 percent
depending on which market you look at.
It is not only in terms of the size of the shareholdings
that there appear to be substantial differences.
It is also in terms of the composition,
so in many countries outsides of the UK there is a
dominance of holdings by families and trusts
holding on behalf of families, as in the case of
Germany, as Graph 3 demonstrates below.
The other striking feature of this graph is the
extent to which there are holdings by other companies:
inter-corporate holdings, cross-shareholdings
and pyramid structures by
which companies hold shares in other
companies as a way of controlling those
companies lower down in the pyramid.
In contrast in Britain, as we know,
the dominant source of shareholding
comes from financial institutions, which
own sixty or seventy percent of the
shares in companies.
Graph 4 (below) brings out another feature:
the importance of insider-director holdings in the
context of the UK.
These observations first raise the question of
to what extent are they temporary or are they
likely to be eroded over time. In fact, the differences
are very persistent
Since the end of the Second World War, the
structure of ownership in Canada, Germany,
Japan UK and US the trends we observe today
have existed: the dominance of families and corporate
holdings in Germany, dominance of corporate
holdings in Japan, and family holdings in
Canada – against the widely held shareholdings
in the UK and the US. Things may be changing
now, but at least those structures have persisted
for an extended period.
The questions that we ought to raise in this
session are, first of all, what (if anything) is the
significance of these differences Do they matter
in terms of corporate governance and the performance
of corporations Do we prefer one system
to another Is it the fact that these systems
are changing an indication that we are converging,
and is the widely-held view that we are converging
on an Anglo-American structure or
should be converging on an Anglo-American
structure, the correct one What role will different
players, in particular financial institutions,
play as these governance structures change
To address these questions we have a group of
very well qualified people to talk on this subject.
Our first speaker is Antonio Borges who is a Vice
President at Goldman Sachs and a Chairman of
the European Corporate Governance Institute,
which is a body which brings together academics
and practitioners across Europe and in the
United States from both the law and an economics
and finance background to address corporate
governance issues. Before that, Antonio was the
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