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Employee representation and board size in the Nordic countries

Author

Listed:
  • Steen Thomsen

    (Center for Corporate Governance)

  • Caspar Rose

    (Center for Corporate Governance)

  • Dorte Kronborg

    (Center for Statistics)

Abstract

Several European countries have mandatory employee representation on company boards, but the consequences for corporate governance are debated. We use employee representation rules in the otherwise quite similar Nordic countries (Denmark, Finland, Norway, and Sweden) to elicit information on shareholder preferences for employee representation and board size. We find that shareholders tend to choose board structures that minimize the proportion of employee representatives. In Denmark and Norway employee representation depends on board size, and shareholders choose board sizes that minimize the number of employee representatives. However, many companies have more employee representatives than is mandatory. In Sweden, where the law mandates a fixed number of employee representatives (two or three depending on firm size), shareholders choose to have larger boards. In Finland, where employee representation is not mandatory,

Suggested Citation

  • Steen Thomsen & Caspar Rose & Dorte Kronborg, 2016. "Employee representation and board size in the Nordic countries," European Journal of Law and Economics, Springer, vol. 42(3), pages 471-490, December.
  • Handle: RePEc:kap:ejlwec:v:42:y:2016:i:3:d:10.1007_s10657-015-9489-9
    DOI: 10.1007/s10657-015-9489-9
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    Cited by:

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    2. Ovidiu Ioan Dumitru & Nicolae Marius Vavura, 2020. "A Short Comparative Study of Corporate Governance in European National Legal Systems," Technium Social Sciences Journal, Technium Science, vol. 10(1), pages 207-216, August.
    3. Naz Sayari & Bill Marcum, 2022. "Board systems, employee representation, and neo‐institutional theory: The moderating effect of economic freedom on corporate boards and financial performance," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3931-3952, December.
    4. Isabell Koinig & Franzisca Weder, 2021. "Employee Representatives and a Good Working Life: Achieving Social and Communicative Sustainability for HRM," Sustainability, MDPI, vol. 13(14), pages 1-19, July.
    5. María Consuelo Pucheta‐Martínez & Isabel Gallego‐Álvarez & Inmaculada Bel‐Oms, 2020. "Varieties of capitalism, corporate governance mechanisms, and stakeholder engagement: An overview of coordinated and liberal market economies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 731-748, March.
    6. Addison, John T. & Teixeira, Paulino, 2018. "What Do Workers Want? The Shortfall in Employee Participation at the European Workplace," IZA Discussion Papers 11506, Institute of Labor Economics (IZA).
    7. Gregorič, Aleksandra, 2022. "Board-level worker representation," GLO Discussion Paper Series 1136, Global Labor Organization (GLO).
    8. John T. Addison & Paulino Teixeira, 2018. "The Shortfall in Formal Employee Participation at the European Workplace," CESifo Working Paper Series 7399, CESifo.
    9. Belot, François & Waxin, Timothée, 2022. "Mandatory employee board representation: Good news for family firms?," International Review of Law and Economics, Elsevier, vol. 71(C).

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