SSE/EFI Working Paper Series in Economics and Finance
No 521:
The Swedish Model of Corporate Ownership and Control in Transition
Magnus Henrekson ()
and Ulf Jakobsson ()
Abstract: We analyze the development of the Swedish ownership model
after WWII. The controlling ownership in Swedish firms is typically
concentrated to one or two owners. Often, but not always, the controlling
owners are Swedish families. Thus, the model resembles the typical
corporate control model of Continental Europe. A distinguishing feature of
the Swedish model is, however, that control is typically based on a smaller
capital base than in other European countries. This feature is a result of
a seemingly paradoxical policy when it comes to private ownership. Tax
policy has consistently disfavored the accumulation of private wealth, but
at the same time corporate law has greatly facilitated the wielding of
control based on a small equity base.
Our analysis shows that the large
gap between ownership and control makes the Swedish corporate control model
both politically and economically unstable.
The major political threat
to date has been the proposal of the Swedish TUC and the Social Democratic
Party to introduce a scheme that would result in the gradual takeover of
the Swedish corporate sector by union-controlled wage-earner funds.
After the political defeat of this proposal economic policy was changed in
a more market liberal direction. This policy change has uncovered the
economic instability of the model. The weak financial base of the
controlling owners makes it difficult for them to take an active part in
the current international restructuring of the corporate sector. Two forces
are now seen as the major threat to the Swedish ownership model: A rapidly
increasing foreign takeover of Swedish firms and the large state and
corporatist pension funds. Their financial assets are far larger than those
of today’s dominant control owners and extensive mandatory and/or
tax-favored systems for pensions saving ascertains that their relative
financial strength will continue to grow sharply.
Keywords: Corporate control; Corporate governance; Corporatism; Entrepreneurship; Ownership policy; Ownership structure; Swedish Model.; (follow links to similar papers)
JEL-Codes: M13; N24; O38; P16; (follow links to similar papers)
55 pages, March 10, 2003, Revised April 16, 2003
This paper was presented at the conference Who will own Europe? The internationalization of asset ownership in the EU today and in the future, arranged by the European Commission (DGECFIN), Brussels, February 27–28, 2003.
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- This paper is published as:
-
Henrekson, Magnus and Ulf Jakobsson, (2005), 'The Swedish Model of Corporate Ownership and Control in Transition' in Huizinga, Harry and Lars Jonung (eds.) Who Will Own Europe? The Internationalisation of Asset Ownership in Europe, chapter 7, pages 207-246, Cambridge University Press.
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