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Comparative Corporate Governance

Legal Perspectives

Veronique Magnier

Comparative Corporate Governance considers the effects of globalization on corporate governance issues and highlights how, despite these widespread consequences, predictions of legal convergence have not come true. By adopting a comparative legal approach, this book explores the disparity between convergence attempts and the persistence of local models of governance in the US, Europe and Asia.
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Chapter 2: Worldwide adoption of corporate governance models

Legal Perspectives

Veronique Magnier

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The adoption of corporate governance theories by national legal systems is not straightforward. The institutional context in which corporate governance systems operate is a major factor of divergence. The discrepancies found in corporate governance systems among the world’s advanced economies are explained by national differences in markets (Easterbrook 1997: 29). Authors also provide evidence on the extent to which legal regulation and path-dependence bias (Bebchuk and Roe 1999) do ‘matter’ in the corporate governance context (Cheffins 2000). Ownership patterns themselves derive from different normative incentives in corporate and financial market laws in such a way that corporate governance systems’ differences used to prevail over convergence. As lines are progressively blurring in a globalized context, it is increasingly difficult to clearly identify theoretical approaches in the various legal systems. Today, the post-crisis era has contributed to curb the trend towards more hybrid models. Consequently, (1) adoption of both theoretical models occurs across legal systems in varying nuanced versions; (2) emerging cross-border corporate governance regulation at the regional (EU, Asia) and international levels also contributed to blur the lines between the rival systems of dispersed and concentrated ownership and corresponding, different corporate governance structures.

Leading corporate scholars once predicted that history was over in the ongoing debate about which corporate governance system produced the best long-term outcomes for society, as shareholder primacy had proven itself to be the only system that could produce sustained economic growth (Hansmann and Kraakman 2001). No convergence of corporate governance systems...

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