Corporate control in Europe

Control devices are a common practice in Europe, used to increase the influence of a dominant shareholder upon the firm beyond his/her cash flow rights. They are often very powerful devices which limit the effective control of corporations to a small group of shareholders, and can be utilized to extract private benefits of control. In this paper, we aim to provide an understanding how these devices work in principal and then examine how they are used in the main Western European economies (France, Italy, Germany, Spain and the UK), in light of the recent changes of legislation and despite improvements in the efficiency of capital markets.