Edited by Claire A. Hill and Brett H. McDonnell
Chapter 20: Varieties of Corporate Law-Making: Competition, Preemption, and Federalism
Robert B. Ahdieh 1. INTRODUCTION In few areas have legal scholars focused more closely on the sources of law than in the study of corporate governance.1 Questions of institutional design thus pervade the literature of corporate law. Is the scope of directors’ and managers’ fiduciary obligations best determined ex ante, by means of positive law, or ex post, in the context of individual disputes (Coffee 1989; Fisch 2000)? If the former, should relevant legislative committees or specialized administrative agencies akin to the Securities and Exchange Commission lead the way (Letsou 2009)? If the latter, are such case-by-case assessments best made by courts of general jurisdiction or judges expert in corporate law (Holland 2009; Sullivan & Conlon 1997)? What is the appropriate role of self-regulatory entities in corporate law, including exchanges, associations of broker-dealers, and various standard-setting organizations (Karmel 2008; Roe 2003)? And what are we to make of hybrid public-private entities such as the Public Company Accounting Oversight Board (Nagy 2010; Pildes 2009; Romano 2009)? Most prominent among the questions of institutional design in corporate law, however, have been those surrounding the allocation of law-making authority as between federal and state authorities: what is the dynamic by which corporate law will be generated at the state level, absent federal intervention? What is the normative quality of the resulting rules? When might a federal role be advisable, if not essential, in the regulation of public corporations? What form ought any such intervention take, and what distortions might it be expected to introduce...
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