The Clash of Paradigms: Switzerland's Long March Towards a Shareholder-Oriented Stock Corporation Law

Abstract

The Swiss Federal Parliament has adopted in 1991 a new Stock Corporation Law, which is generally considered to constitute a big step towards more minority shareholder protection (MSP) and more transparency of Swiss companies. We argue that, even though the changes might seem limited in international comparison, the adoption of the new Stock corporation law reflects a profound change in the dominant conception of the stock corporation. In fact, the analysis of the decision-making process reveals a fundamental change in actors' believes and preferences. This fundamental change in preferences caused the traditionally dominant political and economic coalition between managers and owners - which was based on the stakeholder paradigm of the firm - to collapse. If conservative members of the Federal Parliament have managed - due to particularities of the Swiss polity - to limit the legal changes, it appears clearly that by 1990, the shareholder view of the firm has started to become a widely agreed-upon idea and the formerly well-established stakeholder paradigm had become a thing of the past.

Keywords: transparency coalition, politics of corporate governance, shareholder approach, stakeholder approach, path dependence, institutional change, policy paradigm