Competition and Cooperation in Corporate Governance: The Effects of Labor Institutions on Blockholder Effectiveness in 23 European Countries

We provide an analysis of the costs and benefits of blockholding in Europe, where it is a dominant, but certainly not universal, corporate governance strategy for shareholders of publicly listed firms. We find that the effectiveness of blockholding is conditioned by the specific labor institutions that distinguish European countries from the rest of the world, and that these institutional effects involve both competition and cooperation between blockholders and collective labor interests. We also find that relational blockholders are better able to cope with, or benefit from, these institutional effects than arm's-length blockholders. Empirically, we use advanced meta-analytic methods on a total sample of 748,569 firm-year observations, derived from 162 studies covering 23 European countries.