Corporate Governance in Scandinavia: Comparing Networks and Formal Institutions

Evis Sinani, Steen Thomsen, Anna Staffsud, Trond Randøy, Christofer Edling

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    Abstract

    This article addresses the role of formal institutions and informal networks on corporate governance practices. The existing corporate governance literature has mostly examined the formal institutions, such as the effect of legal systems. Our contribution is to consider the effect of informal ‘small world’ characteristics of ownership and board networks. We use the case of Scandinavia (Denmark, Norway and Sweden) to examine these effects. Our empirical results reveal large differences in formal board and ownership structures between the Scandinavian countries, but strong similarities in terms of law enforcement, political stability, government effectiveness, rule of law, control of corruption as well as voice and accountability. We find that all three countries can be characterized as ‘small worlds' in which trust, information diffusion and reputation mechanisms are active governance mechanisms.
    Original languageEnglish
    Place of PublicationFrederiksberg
    PublisherDepartment of International Economics and Management, Copenhagen Business School
    Number of pages44
    Publication statusPublished - 2007
    SeriesWorking Paper / Department of International Economics and Management, Copenhagen Business School
    Number6-2007

    Keywords

    • International corporate governance
    • Small worlds
    • Social networks
    • Law and finance

    Cite this

    Sinani, E., Thomsen, S., Staffsud, A., Randøy, T., & Edling, C. (2007). Corporate Governance in Scandinavia: Comparing Networks and Formal Institutions. Frederiksberg: Department of International Economics and Management, Copenhagen Business School. Working Paper / Department of International Economics and Management, Copenhagen Business School, No. 6-2007