COVID-19 and Comparative Corporate Governance

Corporate law scholarship has come a long way since Bayless Manning some four decades ago famously pronounced it dead. Not only has doctrinal scholarship continued its project of critique and rationalization, but empirical and economic approaches have injected new life into the field. Recent years have seen the rise of comparative corporate governance (CCG) as an increasingly mainstream approach within the world of corporate governance studies. This is a function partly of an increasing international orientation on the part of legal scholars and partly of an increasingly empirical turn in corporate law scholarship generally. Different practices in other jurisdictions present at least the possibility of natural experiments that attempt to find causal relationships between particular features of a corporate governance regime and real-world outcomes. This body of research has become particularly relevant as we enter the second decade of the twenty-first century. The financial crisis has called into question many of our traditional ways of thinking about corporate governance and the relationship between business enterprises and the state. Are there other countries that do it better? This Article discusses what is unique about CCG as an approach to corporate governance studies. It begins by examining the concepts of corporate governance and comparative corporate governance, making the point that comparative corporate governance has in general been focused on agency problems between shareholders and managers but need not be so. It then looks at methodological issues in comparative corporate governance, critiquing in particular economic Darwinist theories and the failure of theories of international competition in corporate governance to incorporate the notion of comparative advantage. Finally, it reviews major lessons learned from this body of work and suggests direction for future research. Among other things, it calls for more comparative research into alternative business entities dubbed “uncorporations” by Larry Ribstein and into corporate governance in increasingly important economies such as China and India.

Purpose – This chapter discusses the role that indices of corporate governance have had in comparative corporate governance research. Design/Methodology/Approach – The authors begin with a short discussion of what corporate governance is and its main debates. Then, the authors review the main indices (which are also summarized in Table 1), highlighting their strengths and limitations as well as describing some of the findings that emanate from them. Then, the authors discuss the methodological and conceptual assumptions of corporate governance indices that may compromise their construct validity. The authors conclude with some encouraging suggestions for key methodological and research design issues to take into account in future comparative corporate governance. Findings – Many methodological issues in the measuring and analysis of (comparative) corporate governance remain to be solved. First, although corporate governance practices have a direct effect on some of the firms’ strategic decisions, they may only have an indirect effect on firm performance. Second, it is possible that, after all, causality goes the other way around, i.e., the firm performance explains the adoption of certain governance practices. Third, there are also important challenges in measuring firm financial performance as well as measuring and comparing corporate governance effectiveness between firms from different governance settings. Originality/Value – This is one of the first chapter to give an overview of the most current corporate governance indices, both academic and commercial, to discuss their underlying assumptions and limitations, and, finally, to provide specific directions for future research regarding comparative corporate governance.

The question how the governance of enterprises, including the governance of capital markets, should be arranged is as old as the market economy and capitalism itself. Reforms have been stimulated by recently corporate scandals that imposed a critical discussion on the way public corporations are directed and controlled. The literature on corporate governance (CG) originated in the US and the UK, and was initially concerned with a fairly narrow set of issues such as how shareholders can monitor and motivate management to act in their interests. This literature distinguishes between two dichotomous CG models. First, the shareholder-oriented model, which is characterized by strong shareholder rights, single powerful CEO and protection of minority shareholders, prevails mainly in Anglo-Saxon countries. Second, the stakeholder-oriented model, which is characterized by weaker shareholder rights, consensus leadership, and concentrated ownership, prevails in most of the European continent and Japan. For a number of reasons, comparative CG and convergence debates often take place within the contours of the cultural–institutional or societal approach used in this book. Since institutionalists and the societal approach stresses the embeddedness of national institutions and ‘complementarities’ between institutions, alternative responses to internationalizing capital markets, other than convergence, appear possible. Companies may respond very differently to similar sorts of pressure, and distinct sets of ‘best practice’ contingent on the national context may emerge. The current chapter applies this approach by examining the interaction between CG aspects in large, small and medium-sized firms and national institutions in different countries, in the context of internationalizing capital markets. By adopting an institutional approach, the first section describes the major CG features influencing post-war company decision-making in advanced economies. The in-depth explanation of the two main models is followed by an analysis of the Japanese CG model, which is argued to be similar to the Rhineland model. The second section explores the continental European models, which are variants of the two main models. The analysis shows that variations among the advanced and transition economies in these CG features stem from differences in key societal institutions, such as governmental regulation, the character of the financial system, corporate law, and cultural values. In the third section, we offer a brief overview of the models of CG in BRIC countries and more specifically, we discuss in the form of case studies, CG in Russia and China. The fourth section deals with the worldwide diffusion of CG codes, which are instruments of self-regulation, defining best practices with respect to boards, management, supervision, disclosure and auditing. We discuss the main drivers of their diffusion and characteristics across countries, as well as the possible convergence of CG best practices. Finally, the closing case, dealing with the Ahold scandal, should be seen in the light of the link between CG and CSR. The chapter concludes with the major strengths and weaknesses, as well as future directions of change in both CG models.

This paper serves as an introduction to the special issue on comparative corporate governance as well as providing a critical review of the literature on globalisation, comparative economic organisation and corporate governance systems. Despite the widespread rhetoric of global convergence and market-led institutional reform, we argue that national specificity and societal variance of institutional arrangements are still conspicuously resilient in reality and pertinent to issues of regulation, policy and business strategy. Our discussion focuses on the limitations of agency theory and its primary objective, shareholder value maximisation, on the one hand, and the determinants and consequences of institutional diversity across societies on the other. In particular, we suggest that the integration of the literature on employee participation and innovation systems into comparative institutional analysis will serve as a promising alternative to shareholder-centred theories and policy prescriptions while complementing the arguments based on legal and political origins of national systems. While the contributions to the special issue broadly share the basic tenets of our argument, they also address, in commendable rigour and depth, other issues, such as: trust and social relationships; societal and moral foundations of economic behaviour; institutional transferablity; and corporate control and power relations in society.

THIS spring the Supreme Court rejected a claim that the anti-fraud provisions of the Securities Exchange Act' impose a general fiduciary duty on those who control a corporation to act fairly toward minority interests.2 This decision, rejecting attempts to expand federal authority over internal corporate affairs through interpretation and thereby limiting the federal role to preventing fraud in securities transactions, may well increase the demands for major federal regulatory legislation governing the shareholdercorporation relationship. It is almost universally the opinion of academic commentators that state corporation codes do not impose sufficiently stringent controls on corporate management and are lax in protecting shareholders. Only federal intervention, it is said, can correct this sorry situation. This article will test the intellectual underpinnings of the conventional wisdom and of the rather venerable proposals calling for the federal regulation of the governance of corporations3 against an economic theory of corporate function and control. It will conclude both that state corporate legal systems are

The business corporation is one of the greatest organizational inventions, but it creates risks both for shareholders and for third parties. To mitigate these risks, legislators, judges, and corporate lawyers have tried to learn from foreign experiences and adapt their regulatory regimes to them. In the last three decades, this approach has led to a stream of corporate and capital market law reforms unseen before. Corporate governance, the system by which companies are directed and controlled, is today a key topic for legislation, practice, and academia all over the world. Corporate scandals and financial crises have repeatedly highlighted the need to better understand the economic, social, political, and legal determinants of corporate governance in individual countries. Comparative Corporate Governance furthers this goal by bringing together current scholarship in law and economics with the expertise of local corporate governance specialists from twenty-three countries.

Introduction F. Scott Kieff and Troy A. Paredes Part I. The Board of Directors and the CEO: 1. The trouble with boards Lawrence E. Mitchell 2. Rediscovering board expertise: legal implications of the empirical literature Lawrence A. Cunningham 3. The CEO and the board: on CEO overconfidence and institutionalizing dissent in firms F. Scott Kieff and Troy A. Paredes Part II. The Why, When, How, and How Much of Executive Pay: 4. Pay without performance: overview of the issues Lucian A. Bebchuk and Jesse M. Fried 5. Supersize pay, incentive compatibility, and the volatile shareholder interest William W. Bratton 6. 'Say on pay': cautionary notes on the UK experience and the case for muddling through Jeffrey N. Gordon Part III. Constraining Managers and Directors: Investors, Securities Regulation, and the Media: 7. Shareholder activism in the Obama era Stephen M. Bainbridge 8. After Dura: causation in fraud-on-the-market actions Merritt B. Fox 9. From boardroom to courtroom to newsroom: the media and the corporate governance scandals Kathleen F. Brickey Part IV. Delaware Versus Congress: On the Federalization of Corporate Governance: 10. How Delaware law can support better corporate governance James D. Cox 11. Federalism versus federalization: preserving the division of responsibility in corporation law E. Norman Veasey, Shawn Pompian and Christine Di Guglielmo Part V. Comparative Corporate Governance: 12. Regulatory differences in bank and capital market regulation Hideki Kanda 13. European corporate governance after five years with Sarbanes-Oxley Rainer Kulms Epilogue. Three secular trends of corporate law Joel Seligman.

"Chapter 13: Beyond corporate governance: why a new approach to the study of corporate law is needed to address global inequality and economic development" published on 27 Nov 2015 by Edward Elgar Publishing.

Recently, the practice of good corporate governance has become a necessary step for any corporation to manage in the global market. To maintain good corporate governance is an important factor in building market confidence and encouraging stable, long-term foreign investment. Therefore many countries see good corporate governance practices as a way to improve economic performance. In many emerging countries including korea try to improving corporate governance practice to attract foreign investment. In korea corporate governance had become growing concern after Asian financial crisis in 1997. The government officials and regulators impose many restrictions on large firms such as board composition. Government officials and market participants express concerns that poor governance hinders foreign investment and may delay financial development. But rapid globalization makes firms to adapt good corporate governance. It is widely researched and debated that foreign investment is a important element for improving corporate governance in emerging markets. The policy makers has popular view that foreign ownership influences firm performance and profitability. This view derives from presumption that foreign investment is a conduit for technology, capital injection, management skills and various intangibles that promote efficiency. Prior research results tells us that foreign investment improve corporate governance and firm profitability.Based on this hypothesis, I used Cross-Sectional Regression to investigate positive result between foreign investment and corporate governance. This research would contribute for future emerging market corporate governance research. The purpose of this study is to examines the effects of foreign ownership on firm performance and corporate governance, and also investigated casual relationship between foreign ownership and corporate governance in korean listed companies. This study used the cross-sectional regression analysis to examine the foreign investor's effect on the corporate governance and firm performance. Futhermore, I used two-stage least squares approach(2SLS) to investigate the causal relationship between foreign investment and corporate governance. This study used 2nd stage least squares method to mitigate plausible endogeneity by using ordinary least squares method. Since a number of important Korean corporate governance rules apply only to firms with assets over 2 trillion won, an indicator variable for firms with assets over 2 trillion won is adopted as an instrument variable. This study found foreign ownership has a positive effect on corporate governance in 5 year OLS analysis. This result indicate higher foreign ownership leads higher corporate governance index. This empirical analysis shows very strong statistical results at over 99 percent confidence level. This results are the same in yearly OLS analysis. It means positive relationship between foreign ownership and corporate governance index is not temporal. We used 2SLS to investigate casual relations between foreign ownership and corporate governance. The results also shows positive at over 99 percent confidence level. This result proved that corporate governance is not directly effect on foreign ownership, rather foreign ownership effect corporate governance. The instrumental variable approach I adopted provide evidence for a casual relationship between foreign ownership and corporate governance index: foreign investment leads to a higher governance index. It means that an increase on foreign ownership has a direct effect on the corporate governance index of Korean companies. In spite of this research results, we can extend the research. For example, we can examine in depth any difference in foreign institutional investors and industrial investors. Both investors' behavioral pattern difference can be studied depending on corporate governance structures.

Artificial Intelligence (‘AI’) and distributed ledger technology (‘DLT’) are referred to as the new ‘Corporate Technologies’ or ‘CorpTech’ (Enriques and Zetzsche, 2019), currently watched in terms of their potential for change. Specifically, we are watching for the extent to which the organisation, structures and processes, and institutions of economic life, especially those under the aegises of corporations, would shift in response to the advent of AI and DLT. We also need to consider if such shifts warrant responses from the law. We discuss AI and DLT as different domains of technological advancements but they also interface at certain points. The different treatment we give to AI and DLT is essential as their impact on change is different. However, as we will engage in theoretical treatment of how technological change impacts institutions and corporate law more generally, we refer to ‘CorpTech’ as an umbrella term where relevant. We make two distinct but interrelated contributions to the literature on CorpTech. First, we advance an analytic framework, which we term as ‘incremental/facilitative’, ‘radical/disruptive’ and ‘fundamental/structural’, to promote a nuanced understanding of the development of AI and DLT and their effects on business processes, organisation and management, particularly on corporate governance. Second, we develop a theory of how CorpTech will shape corporate law and governance by examining the drivers for institutional change combined with the drivers for corporate law and governance. We argue that CorpTech is unlikely to radically alter the power structures and incentive mechanisms of shareholders, directors and managers, and hence, any fundamental/structural changes to corporate governance is not likely in the near future. After providing a critical overview of AI and DLT and their effect on business practices and corporate governance through this three-level framework, our second contribution is to demonstrate that the major power groups influencing corporate law and governance norms are likely to mobilize old ideology with technological spins in order to achieve incremental institutional changes aligned with their incentives and interests. We suggest it would be unlikely that institutional change would be achieved to facilitate radical/disruptive or fundamental/structural changes to the extent that it denudes extant power structures of their power. To make this argument, we first explore the key theoretical drivers of institutional change. Subsequently, we explain how these drivers are connected to the theoretical drivers for changes in corporate law and governance, specifically the role of shareholders and directors/managers within the context of different economic systems and ownership structures. Finally, we apply this combined theoretical framework to the three-level framework of technological change we discussed. We predict that directors and shareholders will embrace incremental/facilitative AI and DLT to render the board and general meeting decision-making process more efficient and effective. AI is, however, unlikely to fully replace directors or managers, let alone companies, in the foreseeable future. Thus, the idea of self-driving companies is unlikely to become a mainstream economic phenomenon. We are also doubtful that DLT will result in full disinter-mediation as powerful corporate organs will prefer to manage and subsume its use to be compatible with their incentives and preferences.

This essay is a contribution to the forthcoming Oxford University Press Handbook of Corporate Law and Governance edited by Jeffery Gordon and Georg Ringe. In the 1960s and 1970s, corporate law and finance scholars recognized that neither discipline was doing a very good job of explaining how corporations were really structured and performed. For legal scholars, Yale Law School professor and then Stanford Law School dean Bayless Manning confessed that corporate law has “nothing left but our great empty corporation statutes – towering skyscrapers of rusted girders, internally welded together and containing nothing but wind.” Michael Jensen and William Meckling made a similar comment with respect to finance. The theory of the firm was an “empty box” or a “black box” that provided no theory about “how the conflicting objectives of the individual participants are brought into equilibrium.” The result of Jensen and Meckling’s seminal reframing of corporate law in agency cost terms, and so into something far broader than disputes over statutory language, was that both Manning’s empty skyscrapers and Jensen and Meckling’s empty box began to be filled.The essay proceeds by tracking how corporate law became corporate governance – from legal rules standing alone to legal rules interacting with non-legal processes and institutions – through three somewhat idiosyncratically chosen but nonetheless related examples of how we have come to usefully complicate the inquiry into the structures that bear on corporate decision-making and performance. Part I frames the first level of complication in moving from law to governance by defining governance broadly as the company’s operating system, a braided framework encompassing legal and non-legal elements. Part II then adds a second level of complication by treating corporate governance dynamically: corporate governance becomes a path dependent outcome of the tools available when a national governance system begins taking shape, and the process by which elements are added to the governance system going forward – driven by what Paul Milgrom and John Roberts call “supermodularity.” That characteristic reads importantly on both the difficulty of corporate governance, as opposed to corporate law, reform and the non-intuitive pattern of the results of reform: significant reform leads to things getting worse before they get better. Part II then further complicates corporate governance by expanding it beyond the boundaries of the corporation, treating particular governance regimes as complementary to other social structures – for example, the labor market, the capital market and the political structure – that together define different varieties of capitalism. Next, Part III considers commonplace, but I will suggest misguided, efforts to take a different tack from Parts I and II: to simplify rather than complicate corporate governance analysis by recourse to now familiar single factor analytic models: stakeholder theory, team production, director primacy, and shareholder primacy. Part III suggests that these reductions are neither models nor particularly helpful; they neither bridge the contextual specificity of most corporate governance analysis nor address the necessary interaction in allocating responsibilities among shareholders, teams and directors. As well, these “models” are static rather than dynamic, a serious failing in an era in which the second derivative of change is positive in many business environments and Schumpeter seems to be getting the better of Burke. Part IV concludes by examining the importance of a corporate governance system’s capacity to respond to changes in the business environment: the greater the rate of change, the more important is a governance system’s capacity to adapt and the less important its ability to support long-term firm-specific investment.

In this article, we examine the state of the art in comparative and international corporate governance by identifying the key research questions, main concepts, and paradigms of explanations of cross-country diversity in corporate governance. First, we discuss the multiple definitions of corporate governance across disciplines and explore how this multi-dimensional nature of corporate governance posses challenges when making cross-national comparisons. Second, we review existing comparative research on corporate governance and highlight some of the main characteristics of comparative analysis. Third, we analyze how comparative corporate governance has been understood from four different scholarly perspectives: economics and management, culture and sociology, legal, and political paradigms. We conclude from this third section that future research should make an effort to better integrate cross-disciplinary paradigms. Fourth, we investigate what insights these four perspectives bring to better understand change and stability in two particular governance dimensions: corporate ownership and the role of labor in comparative corporate governance. Finally, we conclude the article with some forward looking suggestions regarding (1) how different perspectives of corporate governance can be more effectively integrated by adopting case-based, historical and actor-centered forms of institutional explanations and by (2) discussing the current U.S. corporate governance system, frequently seen as the best practice model.

In this article, we examine the state of the art in comparative and international corporate governance by identifying the key research questions, main concepts, and paradigms of explanations of cross‐country diversity in corporate governance. First, we discuss the multiple definitions of corporate governance across disciplines and explore how this multi‐dimensional nature of corporate governance posses challenges when making cross‐national comparisons. Second, we review existing comparative research on corporate governance and highlight some of the main characteristics of comparative analysis. Third, we analyze how comparative corporate governance has been understood from four different scholarly perspectives: economics and management, culture and sociology, legal, and political paradigms. We conclude from this third section that future research should make an effort to better integrate cross‐disciplinary paradigms. Fourth, we investigate what insights these four perspectives bring to understand change and stability better in two particular governance dimensions: corporate ownership and the role of labor in comparative corporate governance. Finally, we conclude the article with some forward looking suggestions regarding (1) how different perspectives of corporate governance can be more effectively integrated by adopting case‐based, historical, and actor‐centered forms of institutional explanations and by (2) discussing the current U.S. corporate governance system, frequently seen as the “best practice” model.

In this article, we examine the state of the art in comparative and international corporate governance by identifying the key research questions, main concepts, and paradigms of explanations of cross-country diversity in corporate governance. First, we discuss the multiple definitions of corporate governance across disciplines and explore how this multi-dimensional nature of corporate governance posses challenges when making cross-national comparisons. Second, we review existing comparative research on corporate governance and highlight some of the main characteristics of comparative analysis. Third, we analyze how comparative corporate governance has been understood from four different scholarly perspectives: economics and management, culture and sociology, legal, and political paradigms. We conclude from this third section that future research should make an effort to better integrate cross-disciplinary paradigms. Fourth, we investigate what insights these four perspectives bring to better understand change and stability in two particular governance dimensions: corporate ownership and the role of labor in comparative corporate governance. Finally, we conclude the article with some forward looking suggestions regarding (1) how different perspectives of corporate governance can be more effectively integrated by adopting case-based, historical and actor-centered forms of institutional explanations and by (2) discussing the current U.S. corporate governance system, frequently seen as the "best practice" model.

Comparative Corporate Law is at the center of the scholarly debate, has a growing practical importance, and has become a staple course offered by most law schools and universities around the world. Yet there are few teaching resources that offer a systematic, in-depth, but also enjoyable analysis of the subject. Our book (West Academic Press, 2015) intends to be the missing link between a traditional casebook, with judicial decisions, regulatory materials, contractual provisions and comments from several jurisdictions all duly translated in English; and a manual with extensive introductory and connecting paragraphs and detailed notes and questions to stimulate the discussion. After a brief overview of the methodological issues, topics covered include incorporation and regulatory competition among States, corporate finance, corporate governance, directors' liability, shareholders' litigation, shareholders' agreements, mergers and acquisitions, takeovers, insider trading, and international litigation and arbitration. While primarily intended as a teaching tool, the book should be useful also for scholars and practitioners.The excerpt made available here offers an overview of the methodology, the contents and the style of the book, which has received positive feedback, such as the following: “In setting out to produce a casebook to meet the needs of students in different legal systems and on both introductory and advanced courses, make a contribution to scholarly debates and address practical and policy concerns, the authors set themselves ambitious goals, which they have amply achieved. This methodologically rigorous, insightful and stimulating book is rich in technical content but details are never allowed to obscure the main questions. The distinguished authors wear their scholarship lightly and the book is written in an admirably clear and accessible style. This book is a major addition to the growing literature on comparative corporate law and it is destined to shape the way we think about and teach the subject.” (Eilis Ferran, Professor of Company and Securities Law, Faculty of Law, University of Cambridge)“This excellent book is a welcome addition to the still relatively sparse comparative corporate law literature. It is a wonderful teaching resource and a useful reference for the scholar.” (Tan Cheng Han, Professor of Law and Chairman, Centre for Law & Business, Faculty of Law, National University of Singapore)“[Comparative Corporate Law by Ventoruzzo and others] is both comprehensive and readily understandable. I think it will be a significant addition to both the literature and teaching material on comparative corporate governance.” (Martin Lipton, Founding Partner, Wachtell, Lipton, Rosen & Katz)“Corporate law rules vary considerably around the world, and there is much that students of corporate law can learn from a comparative analysis of how different systems deal with similar problems. This casebook, co-authored by a group of experts with a rich set of perspectives, is thus a valuable and welcome addition to the literature.” (Lucian A. Bebchuk, Professor of Law, Economics and Finance, Director, Program on Corporate Governance, Harvard Law School)