Corporate Governance Facts, Foibles and Fables

Abstract

The research questions of this paper are: Has the efficacy of corporate governance improved by the transfer of national bundles of governance practices between jurisdictions? Have more and bigger corporations improved macro economic efficacy? Corporate regulation has substantially increased over the centuries but with diminishing efficacy. For example, 19th century US State constitutions required corporate charters to specify a limited time of existence, as was the practice with European common law companies. Now corporations obtain unlimited life to overpay investors and grow too big to manage, govern, regulate or be allowed to fail. The purpose and efficacy of appointing independent directors, audit committees and auditors has diminished from bundles of national practices transferred between UK & US jurisdictions. Scholars have neglected: (a) the macro and micro economic efficacy of corporations possessing the rights of perpetual succession; (b) the inefficiencies of corporate investors being overpaid with unlimited life firms; (c) historical practices that facilitated self-regulation; (d) the power of corporations to influence the political economy under which they operate that has allowed them to become too big to be reliably managed, governed or regulated; (e) excessive and inappropriate powers of directors to corrupt themselves, their auditors and their business; (f) to rigorously evaluate the fables and foibles like the so called independence of directors and/or auditors. To limit the size of firms, government, taxes and welfare costs, tax concessions are proposed for shareholders to approve long-term ownership transfer to local citizen stakeholders and welfare recipients.