PROCEDIMIENTO DE LA INVESTIGACIÓN

Continental European countries who have built their corporate governance system on civil law often adopt a concentrated share ownership structure which prioritises protection at the expense of minority shareholders.164 Moreover, these countries tend to focus on certain stakeholder groups through giving their interests and rights wide legal protection rather than to shareholders.165 In other words, the stakeholder theory is the underlying principle that distinguishes the Continental corporate governance system.166 Many Continental European countries, especially Germany, have adopted the insider system in terms of institutional investor ownership and control structures.167 Moreover, in contrast to the Anglo-Saxon model, these countries have a two-tier board: the executive board of directors and the supervisory board: "The supervisory board is formed according to different procedures across Europe but in many cases employees have the right to appoint or recommend several members to the supervisory board".168

This model has three main features: it is bank-oriented, meaning that it gives banks the dominant role in a complex system of cross-shareholding and company financing; it is insider-dominated, i.e. a production-oriented, company-centred management system; and finally, it is stakeholder-focused.169 Therefore, in this system, banks and other dominant ownerships, including governments in some countries, might be able to place their representatives on the supervisory board, thus exercising some control.170

In Germany, banks and insurance companies have owned more than 50% of all shares and have strong relationships, business interdependencies and long-term commitment involvement. Similarly, in Austria large shareholders occupy 54% of the companies

164 _{Mallin, C. (2013). Corporate Governance (4th ed.). Oxford: Oxford University Press, at 227.} 165 _{Ibid, at 22.}

166 _{Cernat, L. (2004). The Emerging European Corporate Governance Model: Anglo-Saxon, Continental,}

or Still the Century of Diversity?. Journal of European Public Policy, 11(1), at 153.

167 _{Dignam, A. and Galanis, M. (2009). The Globalisation of Corporate Governance. Farnham: Ashgate}

publishing limited, at 7.

168 _{Cernat, L. (2004). The Emerging European Corporate Governance Model: Anglo-Saxon, Continental,}

or still the century of diversity?. Journal of European Public Policy, 11(1), at 153.

169 _{Weil, G., and Manges, L. (2002). Comparative Study of Corporate Governance Codes Relevant to}

the European Union and its Member States, European Commission, Final report and Annexes,Weil, Gotshal and Manges, at 32. See also Jürgens, U., and Rupp, J. (2002). Working Paper - The German system of corporate governance: characteristics and changes. Social Science Research Center Berlin (WZB), No. FS II 02-203, at 2. available at: http://hdl.handle.net/10419/50757, accessed on 12/3/2015.

170 _{Dignam, A., and Galanis, M. (2008). Corporate Governance and the Importance of Macroeconomic}

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and control between 50 and 75 per cent of the voting rights.171 _{Thus, the value}

orientation that targets maximisation of shareholder return and the value-based conduct of trading stocks play a minor role in this system.172

In the continental literature on corporate governance, good practice for firms does not necessarily mean what is good for shareholders as corporations have independent volition.173 Nevertheless, the continental tradition highlights the labour-related aspects and employee involvement schemes and participatory management, and gives them a right to participate in strategic management decisions. For example, in Austria, Denmark, Germany, Luxembourg and Sweden, employees of companies of a certain size have the right to elect some members of the supervisory body or directors. This is also the case to some extent in Finland and France.174 Consequently, the influence of the labour sector is much greater in the European model when compared with the limited role of trade unions in the Anglo-Saxon model.175

Mallin argues that: "It is likely that, over time, the remaining influence of banks in terms of direct influence in a company will reduce, and it will be the distinction between ownership and control that helps drive and shape corporate governance reform".176 Furthermore, some noteworthy changes have happened recently in the German system, such as stock-based remuneration packages and the introduction of the principle of shareholder value, as well as further regulatory initiatives in increasing transparency and accountability. The adoption of international accounting standards and improvement in stock market regulations have maximised initial public offerings and created some degree of convergence between the German and Anglo-Saxon models. However, these changes have not dissipated the above pivotal divergences which are

171 _{Cernat, L. (2004). The Emerging European Corporate Governance Model: Anglo-Saxon, Continental,}

or still the century of diversity?. Journal of European Public Policy, 11(1), at 150.

172 _{Jürgens, U., and Rupp, J. (2002). Working Paper - The German system of corporate governance:}

characteristics and changes. Social Science Research Center Berlin (WZB), No. FS II 02-203, at 4. available at: http://hdl.handle.net/10419/50757, accessed on 12/3/2015.

173 _{Cernat, L. (2004). The Emerging European Corporate Governance Model: Anglo-Saxon, Continental,}

or still the century of diversity?. Journal of European Public Policy, 11(1), at 149.

174 _{Weil, G., and Manges, L. (2002). Comparative Study of Corporate Governance Codes Relevant to}

the European Union and its Member States, European Commission, Final report and Annexes,Weil, Gotshal and Manges, at 32.

175 _{Cernat, L. (2004). The Emerging European Corporate Governance Model: Anglo-Saxon, Continental,}

or Still the Century of Diversity?. Journal of European Public Policy, 11(1), at 150, 152.

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based on a host of institutional, legal and cultural barriers firmly rooted in those two doctrines.177

177 _{Goergen, M., Manjon, M., and Renneboog, C. (2008). Is the German System of Corporate Governance}

Converging Towards the Anglo-American Model?. Journal of Management and Governance, 12(1), at 65- 66.

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