Part III applies the suggested analytical framework at the micro level by delving deep into China’s corporate and capital market development puzzle. It uses the explanatory power of law and political economy to bring more clarity to China’s evolving approach to corporate governance. The purpose is to better understand the role played by formal law in governing Chinese public firms and ultimately in China’s capital market growth and to unpack the political–economic determinants that drove its evolution. The chapters in this part of the book pay particular attention to the creation and efficacy of corporate governance institutions, both traditional and idiosyncratic, that operate in the Chinese market.

This part of the book finds that law and political economy dynamics have produced operational results. They have mobilized market participants (both economic and political) to design and deploy various growth-promoting mechanisms within firms and in the market at large. The analysis shows how such mechanisms at times triggered, supported, boosted, or replaced more conventional corporate governance institutions in ways that eventually marched the market forward.

This chapter presents evidence on ownership and control in Germany. Ownership concentration dropped in the large German companies in the past few decades. Yet it remained relatively higher than in their counterparts in the Anglo-American world. There was a remarkable increase in the number of companies with dispersed ownership. Yet the widely held companies accounted for only 20% of the top 20 firms, 17% of the top 100 and about 21% of listed companies in 2018–2019. A few other patterns of ownership change have been documented: a decline in the share of other German companies (non-financial and holding companies), domestic banks and insurance companies, and the state as largest shareholders, and the rise of foreign investors. The role of families as key largest shareholders has varied by company size. The chapter also discusses the determinants of corporate ownership persistence and why the forces of path dependence stemming from the German national system of ‘coordinated market economy’ appear to be more powerful than the pressure coming from global markets and legal reforms in the 1990s.

This chapter examines ownership and control structures in Austria. As many other European countries, Austria experienced a shake-up in securities law, mainly induced by EU Directives (such as those on shareholder rights, takeovers and transparency). Despite of investor favourable changes in the securities law, ownership concentration remain very high in Austria in listed and unlisted companies alike. Thus, large shareholders remain the predominant corporate governance model in Austria. The identities of the controlling shareholders remained very much the same during the past decades with one important exception, banks. Pyramidal ownership structures have remained prevalent as of 2018–2019 in Austria, since non-financial firms and holding companies together controlled nearly half of the top 100 Austrian firms. Thus, families and individuals which stand behind those companies remained the most important ultimate controlling owners. There was a remarkable decline of state control of listed companies after privatization but the state retained an important role as large and controlling shareholder in many of the largest (listed and unlisted) Austrian companies. While around twenty-five years ago foreign owners already controlled around 20% of the largest Austrian companies, this percentage kept increasing. The chapter discusses the role of ‘complementary institutions’, the preferences of both controlling owners and prospective buyers, and a missing political will to embrace a more shareholder oriented model.