Karin Jonnergård

Professor emerita

The unlikely root of stock market development : labour influence on transparent accounting

Author

Karin Jonnergård
Ulf Larsson-Olaison

Summary, in English

Few, if any, corporate governance related issues have been given as much research interest as ownership dispersion and ownership concentration of listed corporations: ‘Why is that some countries, such as the US and UK, has dispersed ownership of corporations listed there, while others, such as France and Germany, has concentrated ownership of corporations listed there?’. This is a question that has been given countless answers since the seminal work of La Porta et al (1997) laid the Berle and Means (1932) understanding of corporate ownership to rest. Scholars from business history (e.g. Morck & Steir, 2005), legal studies (e.g. Coffee, 2001), economics, (e.g. La Porta et al, 1998), political science (e.g. Roe, 2003), and even creating its own sub-field comparative corporate governance (e.g. Aguilera & Jackson, 2010), has all provided insights to topic. Often minority shareholder protection has been the main issue, although the role of transparent accounting is also highlighted (e.g. La Porta et al, 1998; Roe, 2003; Höpner, 2005). Arguable, transparent accounting is a necessary precondition of ownership dispersion, as few minority shareholders are likely to surface in absence of it. This indicate that the development pattern of transparent accounting may be one of several aspect to look into when explaining ownership structuresIn this paper we empirically investigate the regulatory processes that created the first wave of transparent accounting in Sweden during the 1970s. Theoretically the paper draws on a path dependency perspective (e.g. North, 1990). Elsewhere in the literature, it has been acknowledged that Swedish pre-IAS harmonization accounting was the most transparent accounting in the world (La Porta et al, 1998). In this paper we argue that the development of transparent accounting in the 1970s was one of the triggers for the remarkable development of the Swedish stock markets that began in 1980s (see further Jonnergård & Larsson-Olaison, 2016) that later on created stock-markets comparable to those of the US and the UK regarding width and depth (see Sinani et al, 2008). This dispersion of ownership occurred despite continuous concentrated control in the listed corporations (see e.g. Lekvall et al, 2015), thus making Sweden an ideal case for exploring the role of transparent accounting. In this paper we develop and test a preposition that organized labour interest during the 1970s made way for transparent accounting in Sweden, which later on favoured outside ownership of listed corporations. Thereby the paper contributes to the discussions of the antecedents and reasons for increasing transparent accounting.

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