The Grip of Nationalism on Corporate Law

Abstract

Economic nationalism has played a major, but overlooked, role in the evolution of corporate law around the world. The historical experiences of several major jurisdictions show that nationalism has left an imprint on the most important features of the governance landscape, ranging from ownership structures and takeover defenses to choice of law and investor protection. Protectionist objectives, rather than the agency cost considerations that dominate the literature, are the proximate cause of corporate reforms with surprising frequency. The recognition of nationalism’s grip on corporate law underscores a critical factor missing from conventional accounts of the development of corporate governance and complicates the normative analysis of corporate institutions by identifying a broader set of economic and geopolitical considerations. It also points to a different, and heretofore unforeseen scenario in the future of corporate governance: neither convergence nor persistence, as conventionally assumed, but backlash against (foreign) shareholder-oriented practices.