The ownership structure and control mechanisms in Sweden: Case study of leading pyramidal corporations

ABSTRACT: This study describes the differences between the corporate governance systems and the ownership structures around the world. It concentrates on the ownership structure of the firms in continental European countries and examined control-enhancing mechanisms that are used to increase controlling power of dominated shareholders in selected developed countries such as Germany, France, Italy and the Netherlands. By using data collected from listed companies in Stockholm stock market, this study analyses the ownership structure of the firms in Sweden to identify the major shareholders and determine their level of controlling power in the firm. We demonstrate that large international corporations in Sweden are owned and controlled by few shareholders that may be wealthy families or institutions. Multiple voting right shares, the pyramid structure as well as cross-shareholding are considered as the main control enhancing mechanisms that are widely used in Swedish firms. Three wealthy families owning large business groups are investigated as case studies in order to clarify how they have leveraged their controlling power in their group of firms by using control-enhancing mechanisms. Attempting to maintain the reputation and trustworthy of the business as well as prioritizing the stakeholders‘ perspective are considered as the key factors that have led to the long run success of these family businesses. Keywords: corporate governance systems, ownership structure, control enhancing mechanisms. …………………………………………………………………………………………………………………………