Who Really Shapes Corporate Governance Rules?

By Ashley Simpson

Why do some countries permit dual-class shares, a corporate governance structure that allows company insiders to retain disproportionate voting control relative to their ownership stake, while others do not? This is the central question driving one of my current research projects. High-profile cases like Facebook, where Mark Zuckerberg controls 61% of votes while owning just 13% of stock, illustrate how consequential these rules can be. Yet existing political economy explanations, which focus on legal origins, political institutions, or labor-owner-manager conflicts, fail to account for the striking variation we observe. For instance, strong minority shareholder protection countries like the US and UK reach opposite conclusions on dual-class shares, as do neighboring countries like Germany and Austria.

I propose a new theory centered on financial interest groups and their lobbying activities, drawing on original data gathered through Freedom of Information requests combined with business statistics. The project speaks to broader questions about who shapes financial regulation, and why, with implications for how we understand shareholder democracy, the concentration of corporate power, and the global competitiveness of financial markets. As more countries revisit their rules in response to shifting capital markets, understanding the political dynamics behind these decisions becomes increasingly important.

Sign up for our mailing list for regular updates from the Institute. You can find the subscription form here: Subscribe to the newsletter.