Over the past twenty years, Private Military and Security Companies (PMSCs) have become significant elements of national security arrangements, assuming many of the functions that have traditionally been undertaken by state armies. Given the centrality of control over the use of coercive force to the functioning and identity of the modern state, and to international order, these developments clearly are of great practical and conceptual interest. This edited volume provides an interdisciplinary overview of PMSCs: what they are, why (...) they have emerged in their current form, how they operate, their current and likely future military, political, social and economic impact, and the moral and legal constraints that do and should apply to their operation. The book focuses firstly upon normative issues raised by the development of PMSCs, and then upon state regulation and policy towards PMSCs, examining finally the impact of PMSCs on civil-military relations. It takes an innovative approach, bringing theory and empirical research into mutually illuminating contact. Includes contributions from experts in IR, political theory, international and corporate law, and economics, and also breaks important new ground by including philosophical discussions of PMSCs. (shrink)

Abstract The institution of war is the broad framework of rules, norms, and organizations dedicated to the prevention, prosecution, and resolution of violent conflict between political entities. Important parts of that institution consist of the accountability arrangements that hold between armed forces, the political leaders who oversee and direct the use of those forces, and the people in whose name the leaders act and from whose ranks the members of the armed forces are drawn. Like other parts of the institution, (...) these arrangements are responsive to changes in military technology and needs, to geopolitical facts, and to moral and political norms. In particular, they are sensitive to the forms that military organization takes. Since the emergence of modern states in Europe some 500 years ago, there have been three main such forms: private providers?in the form of mercenaries, in early modern Europe?then professional standing armies, which in turn developed into citizen armies. Although elements of the three organizations have coexisted in many armies, the citizen army model has dominated until recently. That model brought with it a particular conception of the accountability relations between the army, the state, and the people. The state had authority over and directed the army, which was accountable to it. In turn the state was accountable for its use of the army to the people, on whose behalf it acted. The dominance of state authority over the military is now under strain, with the professional and private elements?in the form of private military and security companies (PMSCs)?having increasing importance. As those elements increase in power and presence, so it becomes more difficult to make the state accountable to the people for its use of the military, and more difficult for the people to act as a restraining force on the way in which the military used. In this essay, I outline and assess these developments?with particular emphasis on the emergence of PMSCs?in the light of a liberal view of (political) violence. The essay focuses on the situation in the United States, which possesses by far the most important military force in the world today, and in which the use of PMSCs is most developed. The paper has three main sections and a brief conclusion: the first section sketches the liberal view of violence and its implications for organizations dedicated to its use; the second outlines the salient characteristics of the three historically dominant forms of armies; and the third looks at the current situation in which the three forms coexist uneasily. (shrink)

The use of private military force by states has been a long-standing phenomena in the history of warfare. Armies of mercenaries, privateering and recruitment of foreign nationals into armed forces have been common during the Middle Ages and later on. However, with the invention of effective firearms and artillery, standing regular armies, conscription and other developments that resulted in the essential rise of costs of war, the role of private military entrepreneurs diminished. By the end of (...) XIXth century the state became almost the only subject that was able to wage a full-scale war. Nevertheless, already in the middle of the XXth century mercenarism has been reborn in Africa’s colonial and post-colonial wars. The end of the XXth century and the beginning of the XXI century witnesses an enormous rise of private security and military companies (PSMC) that are hired to perform different functions related to use of force not only by states, but also by other clients such as international organisations, transnational corporations, etc. A PSMC may be defined as a profit-seeking private enterprise, which is established according to the national law of the state and which is providing, on the basis of a contract, services directly or indirectly connected with the use of military force or its institutions whether in time of armed conflict or peace, notwithstanding how such company describes itself. International humanitarian law has no specific regulation of PSMC. Nevertheless, it would be erroneous to state that the activity of PSMC is not regulated, because international humanitarian law in any case, in one or another way, is applicable to the personnel of PSMC if it is engaged in armed conflict of either international or non-international character. (shrink)

Peace is more likely where there is trade and commerce between nation-states. However, many nations are "failed states" or "failing states," in large part because of civil wars. Yet, "business" may have a role to play here, too; as private military security companies (PMSCs) proliferate, governments and international organizations seem increasingly disposed to contract for their services, in some cases for combat roles as well as non-combat support roles in various conflict zones. This has raised questions about the (...) ethics of using private companies for public purposes, especially where (as now) private companies have operated outside of legal accountability. This article suggests ways in which such accountability can be put in place, such that PMSCs can actually serve the cause of securing local and regional stability as a first step toward establishing a much safer environment for people and for business. (shrink)

Abstract This essay addresses the role of private military and security companies (PMSCs) in security governance. In this context, it offers a historical overview of some of the main developments in the evolution of private warfare and critically discusses some of the key challenges confronting the quest for holding PMSCs accountable in accordance with international human rights and humanitarian norms.

The possibility of using private military and security companies to bolster the capacity to undertake intervention for human rights purposes has been increasingly debated. The focus of such discussions has, however, largely been on practical issues and the contingent problems posed by private force. By contrast, this article considers the principled case for privatising humanitarian intervention. It focuses on two central issues. First, does outsourcing humanitarian intervention to private military and security companies pose some fundamental, (...) deeper problems in this context, such as an abdication of a state's duties? Second, on the other hand, is there a case for preferring these firms to other, state-based agents of humanitarian intervention? For instance, given a state's duties to their own military personnel, should the use of private military and security contractors be preferred to regular soldiers for humanitarian intervention? (shrink)

The private military industry has been growing rapidly since the end of the Cold War. The Morality of Private War uses normative political theory to assess the leading moral arguments for and against the use of private military and security companies.

The legitimacy of the military is frequently overlooked in standard accounts of jus ad bellum. Accordingly, this paper considers how the military should be organized. It proposes a normative conception of legitimacy – the ‘Moderate Instrumentalist Approach’ – that outlines the qualities that a military should possess. It then assesses the three leading ways of organizing the military according to this approach: the use of private military and security companies (PMSCs), a conscripted force and (...) the all-volunteer force (AVF). The paper argues that the AVF, despite some notable problems, is the most legitimate way of organizing the military. (shrink)

Abstract This article examines the common claim that there are gaps in international law that undermine accountability of private military and security companies. A multi-actor analysis examines this question in relation to the commission of international crimes, violations of fundamental human rights, and ordinary crimes. Without this critical first step of identifying specific deficiencies in international law, the debate about how to enhance accountability within this sector is likely to be misguided at best.

Abstract The current accountability system for private military and security contractors (PMSCs) is woefully inadequate, and mere enhancements in oversight cannot hope to remedy that failing. I contend that once we recognize the kind of accountability required of PMSCs, we will realize that radical changes in the foundational relationship between PMSCs and the state are required. More specifically, in order to be appropriately accountable, members of PMSCs must become a part of or, at the very least, directly responsible (...) to the legitimate authoritative military or police structures, and there must be a clear and precise delineation of responsibility among public officials for holding individual members of PMSCs criminally liable. (shrink)

There has been a huge growth in the size and number of Private Military and Security Companies (PMSCs) in the last decade or so. In this context, the question of when, if ever, states should hire PMSCs to carry out military operations has gained particular urgency. In this paper, I defend the answer that states should do so whenever PMSCs will be the most effective agents available against a number of recent objections. All of these objections claim (...) that considerations aside from the relative effectiveness of PMSCs should bear on the question. Some argue that there is something inherently morally problematic with hiring PMSCs, and thus infer that they should sometimes not be hired even when they are the most effective agents available. Others point to undesirable side-effects that hiring PMSCs is thought to cause, and claim that these should be taken into account when deciding whether to hire them. I argue, however, that all of these further considerations are either irrelevant to the decision or reducible to effectiveness. (shrink)

Private military companies are taking over a growing number of roles traditionally performed by the regular military. This article uses the framework of just war theory to consider the central normative issues raised by this privatization of military force.

This book offers a comprehensive moral theory of privatization in war. It examines the kind of wars that private actors might wage separate from the state and the kind of wars that private actors might wage as functionaries of the state. The first type of war serves to probe the _ad bellum_ question of whether private actors can justifiably authorize war, while the second type of war serves to probe the _in bello_ question of whether private (...) actors can justifiably participate in war. The cases that drive the analysis are drawn from the rich and complicated history of private military action, stretching back centuries to the Italian city-states whose mercenaries were reviled by Machiavelli. The book also takes up the hypothetical examples conjured by philosophers—the private protective agencies of Robert Nozick’s _Anarchy, State, and Utopia_, for example, and the private armies of Thomas More’s _Utopia_. The aim of this book is to propose a theory of privatization that retains currency not only in assessing current military engagements, but past and future ones as well. In doing so, it also raises a set of important questions about the very enterprise of war. This book will be of much interest to students of ethics, political philosophy, military studies, international relations, war and conflict studies, and security studies. (shrink)

Bringing together contributors from philosophy, international relations, security studies, and strategic studies, New Wars and New Soldiers offers a truly interdisciplinary analysis reflective of the nature of modern warfare. This comprehensive approach allows the reader to see the broad scope of modern military ethics, and to understand the numerous questions about modern conflict that require critical scrutiny. Aimed at both military and academic audiences, this paperback will be of significant interest to researchers and students in philosophy, sociology, (...) class='Hi'>military and strategic studies, international relations, politics, and security studies, acting as an ideal course text or as supplementary reading. (shrink)

Very little of the expanding debate over private policing has employed the language of human rights. This is notable not just because private policing is a distinctly global phenomenon, and human rights have become, as Michael Ignatieff puts it, “the lingua franca of global moral thought.” It is notable as well because a parallel development that seems in many ways related to the spread of private policing—the escalating importance of private military companies—has been debated as (...) a matter of human rights. This Article asks whether discussions of private policing have been impoverished by their failure to employ the language of human rights. It begins by discussing the dramatic rise, over the past several decades, in the size and significance of private policing. It then summarizes the academic and public policy debates about that development and considers what, if anything, the language of human rights could add to those debates, and whether the addition would be welcome. One strand of the Article compares the debate over private policing with the debate over private military companies. Another strand compares private policing with private prisons, in light of the recent ruling by the Supreme Court of Israel declaring private prisons unconstitutional. The Article concludes that the benefits of introducing the language of human rights into debates about private policing are far from clear—with one exception. Human rights, particularly as codified in international treaties, do seem a promising way to get traction on a particular aspect of police privatization that has received less attention than it deserves: the way in which widespread reliance on private security firms may weaken public commitment to providing everyone with a minimally acceptable degree of protection against private violence. (shrink)

The post 9/11 environment has been characterized by domestic policy actors being incorporated into a globalizing defense industrial sector through the concept of civil-military integration. From administration to administration, the push for increased civil-military integration has spread beyond its original boundaries and has reached the frontlines of the American military. This begs the question, can the market-driven logic of the commercial sector be integrated into the objectives and values of the noncivilian, military sector? More precisely, is (...) civil-military integration the appropriate solution to the post 9/11 strategic shift? The purpose of this study is not to address the detailed merits or limitations of the increased reliance on private contractors. Rather, this study’s primary focus is to examine the policies that set into motion and continue to promote the cornerstone of civil-military integration: strategic outsourcing. This study argues that in today’s threat environment, the extent of civil-military integration poses unique challenges for U.S. strategic policy. With contactors on the battlefield, basic doctrinal issues emerge. The most basic of these is the notion that in a war zone military members are asked to risk their lives for their country. But, while people are willing to risk their lives for their country, they may not be willing to risk their lives for their company. (shrink)

The legitimacy of putting public activities – such as providing education and welfare, but also running prisons or providing military services – into the hands of private companies is hotly contested. In The Privatized State, Chiara Cordelli puts forward an original argument, from a Kantian perspective, for why it is problematic: it replaces the omnilateral will of all citizens, which is realized through public institutions, with the unilateral will of agents to whom these activities have been delegated. While (...) adding an important dimension to the debate, I am not fully convinced that private institutions always fail to realize the omnilateral will, and that this is the only, or always most central, normative problem of privatization. Instead, many concrete cases of privatization seem normatively overdetermined in their wrongness. Nonetheless, Cordelli’s brilliant discussion invites us to rethink these phenomena from an important angle and helps us to better understand what an ideal civil service would look like. (shrink)

The private provision of security services has attracted a great deal of recent attention, both professional and popular. Much of that attention suggests the questioned moral legitimacy of the private vs. public provision of security. Linking the literature on moral legitimacy and responsibility from new institutional and stakeholder theories, we examine the relationship between moral legitimacy and responsible behavior by both private security companies (PSCs) and their stakeholders. We ask what the moral-legitimacy-enhancing responsibilities of both might be, (...) and contribute to both literatures and their managerial implications by detailing the content of those responsibilities, emphasizing the reciprocal nature of moral obligations. We suggest that the moral legitimacy of the industry depends upon responsible behavior by both PSCsandtheir stakeholders. (shrink)

University research in the U.S.A. is based on a tight relationship between University and economic activity. In Europe and South America, although less commonly than in the U.S.A., there's already a large amount of experiences related to the creation of "on campus" or "spin off" companies based on the results and knowledge obtained from research in University departments and R&D centres financed with public funds. The virtual base of this results in communication technologies enables private use and the appropriation (...) of the benefits by their authors. European model, historically widely separated from private companies, has produced high quality basic research, but it has failed to obtain profit from technological development. Research funds happen to be basically public. Europe heads for economic, politic and military union. Common economic space and the growing up of the new markets, which we can foresee to be extended to other countries, will promote business opportunities and the relationship University-Industry. University institutions and faculties should think about their current ethic convictions to create a new Industry-University model in the context of a global economy. (shrink)

University research in the U.S.A. is based on a tight relationship between University and economic activity. In Europe and South America, although less commonly than in the U.S.A., there's already a large amount of experiences related to the creation of "on campus" or "spin off" companies based on the results and knowledge obtained from research in University departments and R&D centres financed with public funds. The virtual base of this results in communication technologies enables private use and the appropriation (...) of the benefits by their authors. European model, historically widely separated from private companies, has produced high quality basic research, but it has failed to obtain profit from technological development. Research funds happen to be basically public. Europe heads for economic, politic and military union. Common economic space and the growing up of the new markets, which we can foresee to be extended to other countries, will promote business opportunities and the relationship University-Industry. University institutions and faculties should think about their current ethic convictions to create a new Industry-University model in the context of a global economy. (shrink)

Práce se zabývá problematikou privátních armád formou případové studie americké soukromé vojenské společnosti Blackwater a ruské soukromé vojenské společnosti Wagner Group. U obou společností jsou pokryty jejich vznik, operace a dopady činnosti. Cíle práce jsou: zhodnotit nasazení obou vojenských společností; zjistit, zda se jedná o efektivní nástroje státní moci; porovnat působení těchto organizací z hlediska loajality a morálky jejích příslušníků s Machiavelliho poznatky o válce; s ohledem na teorii spravedlivé války určit, jestli příslušníci těchto organizací lze identifikovat spíše jako žoldáky (...) bojující pro vlastní obohacení, nebo bojovníky spravedlivé války. (shrink)

I argue that, according to Just War Theory, those who work as administrative personnel in the private military industry can be permissibly harmed while at work by enemy combatants. That is, for better or worse, a Just War theorist should consider all those who work as administrative personnel in the private military industry either: (i) individuals who may be permissibly restrained with lethal force while at work, or (ii) individuals who may be harmed by permissible attacks (...) against their workplace. In doing so, I also provide some critical analysis of the relevant Just War concepts. (shrink)

Abstract The rapidly growing presence of private military and security contractors (PMSCs) in armed conflict and post-conflict situations in the last decade brought corresponding incidents of serious misconduct by PMSC personnel. The two most infamous events?one involving the firm formerly known as Blackwater and the other involving Titan and CACI?engendered scrutiny of available mechanisms for criminal and civil accountability of the individuals whose misconduct caused the harm. Along a parallel track, scholars and policymakers began examining the responsibility of (...) states and international organizations for the harm that occurred. Both approaches have primarily focused on post-conduct accountability?of the individuals who caused the harm, of the state in which the harm occurred, or of the state or organization that hired the PMSC whose personnel caused the harm. Less attention, however, has been paid to the idea of pre-conduct accountability for PMSCs and their personnel. A broad understanding of ?accountability for? PMSCs and their personnel encompasses not only responsibility for harm caused by conduct, but responsibility for hiring, hosting, and monitoring these entities, as well as responsibility to the victims of the harm. This article provides a comprehensive approach for analyzing the existing international legal regime, and whether and to what extent the legal regime provides ?accountability for? PMSCs and their personnel. It does so by proposing a practical construct of three phases based on PMSC operations?Contracting, In-the-Field, and Post-Conduct?with which to assess the various bodies of international law. (shrink)

This provocative and original book challenges the commonplace that contemporary international interactions are best understood as struggles for power. Eschewing jargon and theoretical abstraction, Mervyn Frost argues that global politics and global civil society must be understood in ethical terms. International actors are always faced with the ethical question: So, what ought we to do in circumstances like these? Illustrating the centrality of ethics to our understanding of global politics and global civil society with detailed case studies, Frost shows how (...) international actors constitute one another in global social practices that are underpinned by specific ethical commitments. Case Studies examined include: The War on Iraq The 'Global War on Terror' Iran Human Rights Globalization and Migration The use of Private Military Companies. Global Ethics forces readers to confront their own necessary ethical engagement as citizens and rights holders in global society. Failure to understand international relations in ethical terms will lead to misguided action. This book should be read by all scholars and students of international relations as well as the general reader seeking an accessible account of the importance of ethical decisions in world affairs. (shrink)

ABSTRACTI argue that, according to just war theory, those who work as administrative personnel in the private military industry can be permissibly harmed while at work by enemy combatants. That is, for better or worse, a just war theorist should consider all those who work as administrative personnel in the private military industry as either: individuals who may be permissibly restrained with lethal force while at work; or individuals who may be harmed by permissible attacks against (...) their workplace. In doing so, I also provide some critical analysis of the relevant just war concepts. (shrink)

Just War scholarship has adapted to contemporary crises and situations. But its adaptation has spurned debate and conversation--a method and means of pushing its thinking forward. Now the Just War tradition risks becoming marginalized. This concern may seem out of place as Just War literature is proliferating, yet this literature remains welded to traditional conceptualizations of Just War. Caron E. Gentry and Amy E. Eckert argue that the tradition needs to be updated to deal with substate actors within the realm (...) of legitimate authority, private military companies, and the questionable moral difference between the use of conventional and nuclear weapons. Additionally, as recent policy makers and scholars have tried to make the Just War criteria legalistic, they have weakened the tradition's ability to draw from and adjust to its contemporaneous setting. The essays in The Future of Just War seek to reorient the tradition around its core concerns of preventing the unjust use of force by states and limiting the harm inflicted on vulnerable populations such as civilian noncombatants. The pursuit of these challenges involves both a reclaiming of traditional Just War principles from those who would push it toward greater permissiveness with respect to war, as well as the application of Just War principles to emerging issues, such as the growing use of robotics in war or the privatization of force. These essays share a commitment to the idea that the tradition is more about a rigorous application of Just War principles than the satisfaction of a checklist of criteria to be met before waging "just" war in the service of national interest. (shrink)

(2014). The Ethical Implications of the Use of Private Military Force: Regulatable or Irreconcilable? Journal of Military Ethics: Vol. 13, No. 1, pp. 49-69. doi: 10.1080/15027570.2014.908645.

Sustainability reporting guidelines developed by Global Reporting Initiative provide a systematic approach for the companies to report their performance on social, environmental, and economic dimensions of sustainability. This study compared the sustainability reports of leading Indian public and private sector companies. Reports were analyzed based on GRI guidelines toward their reporting on sustainability. A numerical score from 0 to 3 was assigned for each of the 84 performance indicators of the GRI 2011 guidelines based on inclusiveness of sustainability report. (...) The analysis showed that reporting on economic dimension was comparatively better as compared to social and environmental dimensions. Sampled companies did not show much difference in their reporting practices on economic performances. However, considerable difference was observed in their reporting practices on environmental and social dimensions. Reporting practices of Tata Steel were better in all dimensions of sustainability and emerged as a responsible company on sustainability reporting. (shrink)

In A Treatise on Virtues and Rewards, Dragonetti advances a theory of action based on rewards for virtues. The idea of rewards, especially of awards, relies on the hypothesis that intrinsic motivations drive the actions of good or virtuous citizens. We apply this theory to virtuous entrepreneurs who voluntarily adopt ethical principles as promoted by a recent Italian law. These firms receive an ethical rating by the Italian Competition Authority and can access a set of economic and non-economic benefits. We (...) survey a sample of 152 private companies with an ER and examine their views on the economic and social motivations and benefits as well as the perceived usefulness of the ER for improving ethical behaviour. An exploratory factor analysis detects four categories of motivation and two categories of benefits, which we use in regression models to test Dragonetti’s theory. Overall, respondents see the ER as an effective tool, except in terms of improving economic performance. We also find that entrepreneurs with lower economic and higher responsiveness motivations attain higher ERs. However, in the respondents’ opinions, the ER is not producing any concrete benefits since we find no relationship between the ER and economic or competitive rewards. These findings have implications for the ICA as well as for private companies. (shrink)

“Daily Mail”, “Centros”, “Überseering” and “Inspire Art”: The ECJ has triggered by applying the principle of freedom of establishment step by step the competition between EU corporate legal systems. Entrepreneurs and investors within the EU now can choose between the various corporate legal forms of the various member states when deciding where and how to carry out their business. “Corporate Business Forms in Europe” is the first compendium including a review and description of the most important types of corporate business (...) forms in the newly enlarged Europe. In particular with respect to the proposed directive concerning the transfer of the registered office of a company from one member state to another under perpetuation of its legal capacity this compendium becomes an indispensable reference book for investors/businessmen, lawyers and students providing practical information starting with the formation and ending with the winding up of the various types of corporate entities presented. The team of authors comprises lawyers and professionals from the various countries concerned with a profound background in corporate law. (shrink)

"This book explores the ethical implications of using armed contractors, taking a consequentialist approach to this multidisciplinary debate. While privatization is not a new concept for the U.S. military, the public debate on military privatization is limited to legal, financial, and pragmatic concerns. Missing is a critical assessment of the ethical dimensions of military privatization in general; more specifically, in light of the increased reliance upon armed contractors, it must be asked whether it is morally permissible for (...) governments to employ them at all. To this end, this book explores four areas that highlight the ethical implications of using armed contractors: how armed contractors are distinct from soldiers and mercenaries; the commodification of force; the belligerent equality of combatants; and the impact of armed contractors on the professional military. While some take an absolutist position, wanting to bar the use of private military altogether, this book reveals how these absolutist arguments are problematic and highlights that there are circumstances where turning to private force may be the only option. Recognising that outsourcing force will continue, this book thus proposes some changes to account for the problems of commodification, belligerent equality, and the challenge to the military profession. This book will be of interest to students of private security, military studies, ethics, security studies and IR in general."--Provided by publisher. (shrink)

This article focuses on the recent work of James Pattison, who raises questions about the ethical justification of using private military forces in waging war. Objectivists argue that the State has a legal monopoly over the use of force; they reject privatization of military force as leading to anarchism or crony capitalism. However, this essay argues that Objectivism should accept the privatization of the military business and that Objectivism can overcome the profitmotive and right intention objections (...) that Pattison lays out. Privatization entails neither anarchism nor crony capitalism. (shrink)

This book explores the ethical implications of war in the contemporary world. The author, a leading theorist of warfare, explains why it is of crucial importance that Western countries should continue to apply traditional ethical rules and practices in war, even when engaging with international terrorist groups. The book uses the work of the late American philosopher Richard Rorty to explain the need to make ethical rules central to the conduct of military operations. Arguing that the question of ethics (...) was re-opened by the 'War on Terror', the book then examines America's post-9/11 redefinition of its own prevailing discourse of war. It ends with a discussion of other key challenges to the ethics of war, such as the rise of private security companies and the use of robots in war. In exploring these issues, this book seeks to place ethics at the centre of debates about the conduct of future warfare. This book will be of great interest to all students of military ethics, war studies, military history and strategic studies in general, and to military colleges in particular. (shrink)

The purpose of this article is to analyse the main provisions of the European private company not limited by the provisions as presented by the European Commission in its Proposal for a Council Regulation on the statute for European private company, but also including amendments introduced by the European Parliament and taking into account the negotiations in the Council of the European Union. This article analyses the development of the European private company and explains (...) why such legal form of a company is needed. It provides the analysis of the main provisions of the proposal for the Regulation, the assessment of advantages and drawbacks of the alternatives introduced by the European Parliament and considered in the Council of the European Union, evaluation of the response of these provisions to the specific needs of small and medium-sized enterprises. The article also presents conclusions and suggestions for the improvement of the legal provisions. (shrink)

Conventional economic theory portrays privatization as a transformative event for a company, even when it is partial and the state maintains control. According to this view, private investors have stronger incentives than voters to monitor management performance and constrain side-payments to political allies of the government. But how exactly can private investors discipline managers they cannot fire? Proponents of privatization place their hopes on disclosure obligations under securities laws, triggered by privatized companies’ stock exchange listings. They argue (...) that, because company disclosures can reveal side-payments to government allies and cause private investors to abandon the stock, management should avoid political favoritism after a stock exchange listing. The Article explores whether investors responded to indications of political favoritism as the above theory would predict. Case study evidence comes from major privatizations in Greece during the last two decades in telecommunications, energy, and gaming. The Article examines the public disclosures of partially privatized companies in two key areas where the risk of political side-deals and corruption remains high: contracts with suppliers and relationships with labor. Greek companies’ disclosure documents included clear indications that payouts to suppliers and labor continued to increase during the period of partial privatization. However, these companies’ stocks remained attractive to investors. (shrink)

This article recalls the fact that until the mid-19th century neither company legislation, nor jurists, nor economists, envisioned companies to be private or small. Nevertheless, once freedom of incorporation and general limited liability were enacted, a new practice was set in motion in Britain. Smaller companies were formed in growing numbers, replacing partnerships, family firms and even sole proprietorships. They operated in sectors in which corporations had not been found before. These companies did not seek access to the (...) stock markets. The article tracks the take-up pattern and changing characteristics of the corporate form in Britain between the enactment of free incorporation and general limited liability (1844–62) and the formal legal recognition of the private company (1907). It shows the dramatic increase in annual incorporation and the parallel decrease in the average capital and average number of shareholders in newly formed companies. The article then analyses the reasons for the decision of businesspersons to incorporate their small firms. The main motivations were the possibility to create asset partitioning between personal and business assets and the ability to use the floating charge. Finally, the article examines the legal reaction to the bottom up emergence of the private company. It examines the reactions of the courts (in the famous Salomon v Salomon case) and of the legislature to this unpredicted practice. It argues that incorporators and their lawyers used the available contractual flexibility to privately design Articles of Association and to adjust them to the specific needs of private and small companies, often by introducing partnership internal governance rules into company Articles. The present study relies on newly gathered data on the take-up of the company form and a newly produced sample of company files collected at Companies House and the National Archives. (shrink)

Abstract In the last 20 years the ruthless competition for natural resources, political instability, armed conflicts, and the terrorist attacks of 9/11 have paved the way for private military and security companies (PMSCs) to operate in areas which were until recently the preserve of the state. PMSCs, less regulated than the toy industry, commit grave human rights violations with impunity. The United Nations has elaborated an international binding instrument to regulate their activities but the opposition of the U.S., (...) U.K., and other Western governments?and from PMSCs, which prefer self-regulation?have prevented any advancement. (shrink)

The objective of this paper is to analyze the effect of privatization on the performance of firms by using a panel data set of 38 companies that were privatized in Europe. We compare the profit, profitability, total product, operating efficiency, net income, employment, leverage and risk of these SOEs before and after their privatization. The legal environment, regulation, goals of privatization and competition characterize each sector, which is why we split the total sample into sectors. Our results indicate that the (...) performance of companies in the utility industry is significantly better after privatization; however, we cannot assert this for the other sectors. (shrink)

The migration of publicly-held companies to private status through use of private equity has been both lauded and lambasted. While agency theorists praise the public-to-private or PTP firm as being an efficient form of corporate governance, others suggest that going private allows owners and managers to extract, rather than add, value.We contribute by developing a categorization of the potential sources of value for the PTP firm. We analyze the effects of each source of value, and find (...) that there are specific negative effects for non-equity stakeholders associated with several sources. Our analysis indicates that the degree to which value is added versus extracted will vary across firms; yet, all will tend to engage in some value extraction. Policy implications are discussed. (shrink)