Is Codetermination in Europe a barrier to excessive financialization?

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Presenters: Mustafa Erdem Sakinç, Université Sorbonne Paris Nord and Emre Gömeç, Universität Kassel

Chair: Daniele Tori, Lecturer in Finance, Faculty of Business and Law at The Open University

In our research, we aim to show that there is a dynamic and multifaceted relationship between corporate governance, finance and labour, rather than a domination of financial choices over industrial relations and labour outcomes. We hypothesize that the less labour has access to corporate governance and favourable industrial relations, the more the companies of the country are financialised on average. To explore this relation, we develop a conceptual framework to establish the links between widely used concepts in the literature and firm-level practices that correspond to these concepts. Following we provide an empirical methodology proposing different ways to measure the evidence of codetermination as labour’s access to corporate governance and financialisation as the domination of the logic of finance to extract value from corporations through financial channels. Our preliminary findings show that the European countries populated with codetermination-strong corporations retain more domestic employment, offer higher wage increases, invest more and the financialisation in terms of excessive financial value extraction through dividends and share repurchases remains limited.

Mustafa Erdem Sakinç is professor of economics at Université Paris 13 and a researcher at Centre d’Economie de l’Université Paris Nord. He is also senior researcher of the Academic-Industry Research Network a.k.a. theAIRnet. He received his Ph.D. in economics from University of Bordeaux in 2016. His main research focus is the interactions between business strategies, corporate governance, corporate finance and industrial relations that specify contrasting and converging corporate practices in the US and Europe. He is specialized in aerospace, pharmaceutical and ICT industries. He worked as a researcher for several national and international research projects including FINNOV and ISIGrowth which were funded by Framework Programmes of European Commission. He continues to contribute several other research projects headed by theAIRnet.

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