The role of employee share ownership for corporate governance in the aftermath of the financial crisis – a closer look at the Central Eastern European EU Member States

Following a 2010 initiative opinion by the European Economic and Social
Committee and a 2012 study on employee financial participation (EFP)
commissioned by the European Parliament, in December 2012 the European
Commission included the promotion of employee share ownership
(ESO) in its Action Plan to reform European company law and corporate
governance (European Commission, COM/2012/0740). This marks an extension
in the perception of the issue of EFP in general and ESO in particular
as a policy area that in the 1990ies had been seen predominantly as
related to social policy.
As the link between better corporate governance and ESO is complex it
is worthwhile to review the main arguments and findings. As will be
shown, ESO is directly relevant to all three areas for action identified in
the Action Plan, i.e., transparency, responsibility and competitiveness.
These related issues, i.e., information sharing, long-term shareholding
and participation in decision-making are interlinked and elevate the status
of employees; they are workers but also shareholders and stakeholders
who can play an active role in corporate governance. Such employee
shareholding is a kind of long-term investment that may help to stabilise
capital markets, a welcome contrast to the destabilising effect of speculative
short-term investment.
Against this background we investigate the dynamics of ESO in the
Central Eastern European (CEE) countries over the last decade. Particular attention is given to the difference in evolution of ESO in the CEE countries
– as opposed to that in the old EU Member States. Finally, lessons for
the support of sustainable employee ownership are drawn from the cases
of Poland, Hungary and Lithuania.
1 Jens Lowitzsch (corresponding author): Kelso Professor of Comparative Law, East
European Business Law and European Legal Policy, European University Viadrina,
Frankfurt (Oder), Germany; Iraj Hashi: Professor of Economics, Staffordshire University,
Stoke on Trent, United Kingdom; Alban Hashani: Senior Researcher, Riinvest
Institute for Development Research, Prishtina, Kosovo.