'New governance' in European corporate law regulation as transnational legal pluralism

European Law Journal

Volumn 15, Issue 2, 2009, Pages 246-276

  Zumbansen, Peer ^a  

^a YORK UNIVERSITY   (Canada)

Author keywords

[No Author keywords available]

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EID: 61349116881     PISSN: 13515993     EISSN: 14680386     Source Type: Journal    
DOI: 10.1111/j.1468-0386.2008.00460.x     Document Type: Article

References (275)

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23. See only R. C. Clark, Corporate Law (Little Brown, 1986), at 5 (regarding the importance of incorporating labour law into one's study of business corporations); but see R. Kraakman etal, The Anatomy of Corporate Law. A Comparative and Functional Approach (Oxford University Press, 2004).
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26. See the Commission's Action Plan of 2003, Modernising Company Law and Enhancing Corporate Governance in the European Union - A Plan to Move Forward, COM (2003) 284 Final; see also the Director General's for Internal Market and Services' Summary Report of 2007 on the 'Consultation and Hearing on Future Priorities on the Action Plan...'; on the tasks lying ahead, see Hopt, op cit n 6 supra.
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28. E. Werlauff, 'The SE Company-A New Common European Company from 8 October 2004', (2003) 14 European Business Law Review 85;
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30. P. A. Hall and D. Soskice (eds), Varieties of Capitalism. The Institutional Foundations of Comparative Advantage (Oxford University Press, 2001).
31. See R. J. Gilson, 'The Political Ecology of Takeovers: Thoughts on Harmonising the European Corporate Governance Environment', in K. J. Hopt and E. Wymeersch (eds), European Takeovers. Law and Practice (Butterworths, 1992), and E. Wymeersch, 'Problems of the Regulation of Takeover Bids in Western Europe: A Comparative Survey', in Hopt and Wymeersch, ibid.
32. For the history, see
33. C. Kirchner and R. W. Painter, 'Takeover Defenses under Delaware Law, the Proposed Thirteenth EU Directive and the New German Takeover Law: Comparison and Recommendations for Reform', (2002) 50 American Journal of Comparative Law 451;
34. P. Zumbansen, 'European Corporate Law and National Divergences: The Case of Takeover Law', (2004) 3 Washington University Global Studies Law Review 867;
35. J. Armour and D. Skeel Jr, 'Who Writes the Rules for Hostile Takeovers, and Why?-The Peculiar Divergence of U.S. and U.K. Takeover Regulation', (2007) Georgetown Law Journal 1727.
36. E. Wymeersch, The Takeover Bid Directive, Light and Darkness, Financial Law Institute Working Paper No 2008-01 (January 2008), at 2, available at http://ssrn.com/abstract=1086987.
37. A. Nilsen, The EU Takeover Directive and the Competitiveness of European Industry (The Oxford Council on Good Governance, 2004), available at http://www.oxfordgovernance.org/fileadmin/Publications/EY001.pdf.
38. See
39. M. Jachtenfuchs, 'The Governance Approach to European Integration', (2001) 39 Journal of Common Market Studies 245;
40. C. F. Sabel and J. Zeitlin, 'Learning from Difference: The New Architecture of Experimentalist Governance in the EU', (2008) 14 European Law Journal 271.
41. See, eg, D. Rodrik, 'Governance of Economic Globalisation', in J. S. Nye and J. D. Donahue (eds), Governance in a Globalising World (Brookings, 2000); D. S. Law, 'Globalisation and the Future of Constitutional Rights', (2008) Northwestern University Law Review 1, at 31: 'Although globalisation appears to have levelled off in the world's wealthiest countries in recent years-and the "social"component, in particular, now lags behind the "economic"and the "political"components-the overall trend across all countries remains one of increasing globalisation'.
42. For a succinct account of this regulatory development, see Trubek and Trubek, op cit n 2 supra.
43. C. Barnard and S. Deakin, 'Market Access and Regulatory Competition', in C. Barnard and J. Scott (eds), The Law of the Single European Market. Unpacking the Premises (Hart Publishing, 2002).
44. See the Presidency Conclusions of the Council of the European Union (7652/08), 13-14 March 2008, at 4, available at http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pressData/en/ec/ 99410.pdf: 'The implementation of the broad-based innovation strategy is key to realising EU ambitions in the area'. For an intriguing historical background, see D. Pestre, Science, Society and Politics. Knowledge Societies from an Historical Perspective. Report to the Science, Economy and Society Directorate, European Commission (January 2007), available at http://ec.europa.eu/research/science-society/ document_library/pdf_06/historical-perspectives_en.pdf.
45. C. Schmitthoff, 'The Future of the European Company Law Scene', in C. Schmitthoff (ed), The Harmonisation of European Company Law (The UK National Committee of Comparative Law, 1973).
46. Kraakman et al, op cit n 12 supra.
47. R. La Porta et al, 'Law and Finance', (1998) 106 Journal of Political Economy 1113
48. R. La Porta, F. Lopez-de-Silanes and A. Shleifer, 'The Economic Consequences of Legal Origins', available at http://ssrn.com/abstract= 1028081, (2009) Journal of Economic Literature (forthcoming)
49. B. Ahlering and S. Deakin, 'Labor Regulation, Corporate Governance, and Legal Origin: A Case of Institutional Complementarity?', (2007) 41 Law and Society Review 865;
50. M. Roe, 'Legal Origins, Politics and Modern Stock Markets', (2006) 120 Harvard Law Review 460;
51. M. Siems, 'Shareholder Protection Around the World ("Leximetric II")', (2009) Delaware Journal of Corporate Law (forthcoming).
52. See, eg,
53. A. Riles, 'A New Agenda for the Cultural Study of Law: Taking on the Technicalities', (2005) 53 Buffalo Law Review 973;
54. R. Michaels, 'The Re-State-Ment of Non-State Law: The State, Choice of Law, and the Challenge from Global Legal Pluralism', (2005) 51 Wayne Law Review 1209;
55. R. Michaels, 'The True New Lex Mercatoria: Law Beyond the State', (2007) 14 Indiana Journal of Global Legal Studies 447;
56. P. Schiff Berman, 'Global Legal Pluralism', (2007) 80 Southern California Law Review 1155.
57. See, eg, K. J. Hopt and P. C. Leyens, Board Models in Europe. Recent Developments of Internal Corporate Governance Structures in Germany, the United Kingdom, France and Italy, ECGI Law Working Paper No 18/2004 (2004), available at http://ssrn.com/abstract=487944.
58. See only R. Buxbaum, 'Federal Aspects of Corporate Law and Theory', in T. Daintith and G. Teubner (eds), Contract and Organisation. Legal Analysis in the Light of Economic and Social Theory (Walter de Gruyter, 1986), and
59. D. Charny, 'Competition among Jurisdictions in Formulating Corporate Rules: An American Perspective on the "Race to the Bottom"in the European Communities', (1991) 32 Harvard International Law Journal 423.
60. S. Deakin, 'Regulatory Competition versus Reflexive Harmonisation in European Company Law', in D. C. Esty and D. Geradin (eds), Regulatory Competition and Economic Integration. Comparative Perspectives (Oxford University Press, 2001);
61. J. Armour, 'Who Should Make Corporate Law? EC Legislation versus Regulatory Competition', (2005) 55 Current Legal Problems 369
62. G. Hertig and J. A. McCahery, 'Optional rather than Mandatory EU Company Law: Framework and Specific Proposals', (2007) European Company and Financial Law Review 341.
63. See
64. D. C. Donald, 'Approaching Comparative Company Law', (2009) Fordham Journal of Corporate and Financial Law (forthcoming),
65. P. Zumbansen, 'Spaces and Places: A Systems Theory Approach to Regulatory Competition in European Company Law', (2006) 12 European Law Journal 534.
66. P. C. Jessup, Transnational Law (Yale University Press, 1956).
67. See W. W. Bratton and M. L. Wachter, Shareholder Primacy's Corporatist Origins: Adolf Berle and The Modern Corporation (2007), available at http://ssrn.com/abstract=1021273
68. D. Tsuk, 'From Pluralism to Individualism: Berle and Means and 20th Century American Legal Thought', (2005) 30 Law and Social Inquiry 179.
69. M. Kahan and E. B. Rock, Hedge Fund Activism in the Enforcement of Bondholder Rights, New York University Law and Economics Research Paper No 08-02, available at http://ssrn.com/abstract=1093387; see also S. Jacoby, Finance and Labor: Perspectives on Risk, Inequality, and Democracy (2008), available at http://ssrn.com/abstract=1020843.
70. See the list of codes in various countries on the website available at http://www.ecgi.org.
71. Organisation for Economic Cooperation and Development; World Council for Corporate Governance; International Corporate Governance Network.
72. European Corporate Governance Institute, INSEAD (Institut Européen d'Administration des Affaires), Euroshareholders, etc.
73. See for a comparable analysis of migrating human rights standards, C. Scott and R. Wai, 'Transnational Governance of Corporate Conduct through the Migration of Human Rights Norms: The Potential of Transnational "Private" Litigation', in C. Joerges, I.-J. Sand and G. Teubner (eds), Transnational Governance and Constitutionalism (Hart Publishing, 2004).
74. Zumbansen, op cit n 8 supra.
75. D. Hodson and I. Maher, 'The Open Method as a New Mode of Governance: The Case of Soft Economic Policy Coordination', (2001) 39 Journal of Common Market Studies 719.
76. C. F. Sabel and J. Zeitlin, 'Learning from Difference: The New Architecture of Experimentalist Governance in the EU', (2008) 14 European Law Journal 271, at 292.
77. See, eg,
78. J. Scott and D. Trubek, 'Mind the Gap: Law and New Approaches to Governance in the European Union', (2002) 8 European Law Journal 1.
79. F. Snyder, 'European Constitutionalism in the 21st Century', in T. Tridimas and P. Nebbia (eds), European Union Law for the Twenty-First Century, Vol 1 (Hart Publishing, 2004), at 13.
80. See OECD Principles of Corporate Governance (rev. 2004), available at http://www.ecgi.org/codes/documents/principles_en_final.pdf.
81. See N. Reich, Understanding EU Law. Objectives, Principles and Methods of Community Law (Intersentia, 2nd edn, 2005), at 307: 'Governance is concerned with achieving this balance between legitimate and illegitimate uses of autonomy'.
82. Critically, see Scott and Trubek, op cit n 47 supra; see also
83. K. A. Armstrong, 'Rediscovering Civil Society: The European Union and the White Paper on Governance', (2002) 8 European Law Journal 102.
84. Sabel and Zeitlin, op cit n 46 supra.
85. P. Zumbansen, 'The Parallel Worlds of Corporate Governance and Labor Law', (2006) 13 Indiana Journal of Global Studies 261.
86. S. Deakin, Reflexive Governance and European Company Law, CLPE Research Paper Series 2007, available at http://www.comparativeresearch.net (also in this issue).
87. See the website available at http://ec.europa.eu/internal_market/ company/ecgforum/index_en.htm.
88. See, eg,
89. J. N. Gordon, 'Pathways to Corporate Governance? Two Steps on the Road to Shareholder Capitalism in Germany', (1999) 5 Columbia Journal of European Law 219
90. R. J. Gilson, 'Globalising Corporate Governance: Convergence of Form or Function?', (2001) 49 American Journal of Company Law 329;
91. See F. Bolkestein, Corporate Governance in the Euopean Union, Speech of 18 October 2004 on the occasion of the Inauguration of the ECGF in The Hague, available at: http://europa.eu/rapid/pressReleasesAction.do? reference=SPEECH/04/460&format=PDF&aged=1&language= EN&guiLanguage=en; see J. Winter, Report of the High Level Group of Company Law Experts on A Modern Regulatory Framework for Company Law in Europe (2002), available at http://ec.europa.eu/ internal_market/company/docs/modern/report_en.pdf, at 9 and 72.
92. Bolkestein, ibid.
93. See, eg, A. A. Berle, The 20th Century Capitalist Revolution (Harcourt, Brace & World, 1954); M. J. Roe, 'Path Dependence, Political Options and Governance Systems', in K. J. Hopt and E. Wymeersch (eds), Comparative Corporate Governance. Essays and Materials (Walter de Gruyter, 1997); E. Berglöf and E.-L. v. Thadden, 'The Changing Corporate Governance Paradigm: Implications for Developing and Transition Economies', in S. S. Cohen and G. Boyd (eds), Corporate Governance and Globalisation. Long Range Planning Issues (Edward Elgar, 2000).
94. For the example of Germany, see only U. Noack and D. Zetzsche, Germany's Corporate and Financial Law 2007 (Getting) Ready for Competition, Center for Business and Corporate Law Research Paper No 06/2007 (2007), available at http://ssrn.com/abstract=986357.
95. G. Teubner, 'Enterprise Corporatism: New Industrial Policy and the "Essence"of the Legal Person', (1988) 36 American Journal of Company Law 130; E. Orts, 'Reflexive Environmental Law', (1995) 89 Northwestern University Law Review 1227; K.-H. Ladeur, 'Die Prozeduralisierung des Unternehmens', in D. Hart (ed), Privatrecht im 'Risikostaat'(Nomos, 1997).
96. Kraakman et al, op cit n 12 supra.
97. For the example of a transnational regulatory framework of corporate environmental responsibilities of multinational chemical enterprises, see the excellent study by M. Herberg, Globalisierung und private Selbstregulierung (2007).
98. See K. J. Hopt, 'Common Principles of Corporate Governance in Europe?' in J. A. McCahery etal (eds), Corporate Governance Regimes. Convergence and Diversity (Oxford University Press, 2002).
99. For the observation that even the European Court of Justice's decisions in Centros and others since 1999, which facilitated greater corporate mobility, have neither significantly induced more foreign incorporation nor more regulatory competition; see W. Bratton, J. McCahery and E. Vermeulen, How does Corporate Mobility Affect Lawmaking? A Comparative Analysis, ECGI Law Working Paper No 91/2008 (2008), available at http://ssrn.com/abstract=1086667.
100. F. Partnoy, Financial Innovation and Corporate Law, University of San Diego Legal Studies Research Paper No 07-89 (2007), available at http://ssrn.com/abstract=976931.
101. H. Hansmann and R. Kraakman, 'The End of History for Corporate Law', (2001) 89 Georgetown Law Journal 439;
102. H. Hansmann, 'How Close is the End of History?', (2006) 31 Journal of Corporation Law 745.
103. B. Eberlein and E. Grande, 'Beyond Delegation: Transnational Regulatory Regimes and the EU Regulatory State', (2005) 12 Journal of European Public Policy 89.
104. G. Majone, Dilemmas of European Integration: The Ambiguities & Pitfalls of Integration by Stealth (Oxford University Press, 2005).
105. Sabel and Zeitlin, op cit n 23 supra, at 273.
106. ibid, at 304.
107. ibid.
108. ibid, at 305.
109. ibid, at 313.
110. ibid, at 315-316.
111. J. Wouters, 'European Company Law: Quo Vadis?', (2000) 37 Common Market Law Review 257;
112. See above all Schmitthoff, op cit n 28 supra.
113. See Hopt, op cit n 64 supra.
114. For an overview of these initiatives, see the excellent account by
115. J. Wouters, 'European Company Law: Quo Vadis?', (2000) 37 Common Market Law Review 257;
116. See the report J. Winter, Report of the High Level Group of Company Law Experts on Issues related to Takeover Bids (2002), available at http://europa.eu.int/comm/internal_market/company/docs/takeoverbids/ 2002-01-hlg-report_en.pdf.
117. J. Winter, Report of the High Level Group of Company Law Experts on A Modern Regulatory Framework for Company Law in Europe (2002), available at http://ec.europa.eu/internal_market/company/docs/modern/report_en.pdf.
118. Document COM(2003)284, available at http://eur-lex.europa.eu/LexUriServ/ site/en/com/2003/com2003_0284en01.pdf.
119. Action Plan, n 15 supra, at 10-17.
120. ibid, at 22.
121. See the website available at http://ec.europa.eu/internal_market/company/ docs/modern/governance-consult-responses_en.pdf.
122. ibid, at 5.
123. ibid, at 6.
124. According to EU Internal Market Commissioner, Charlie McCreevy, in a speech at the Corporate Governance Forum on 20 January 2005, there is neither need nor political will for a European-wide corporate governance code: 'We see no need for this at present and the adoption of such a code, if it were even possible, would be an inevitable and possibly messy political compromise, which would be unlikely to achieve full information for investors about the key corporate governance rules'; available at http://europa.eu/rapid/pressReleasesAction.do?reference= SPEECH/05/26&format=HTML&aged=1&language=EN&guiLanguage= en; see also Action Plan, n 15 supra, at 11: '...no need for an EU corporate governance code'.
125. Winter, op cit n 57 supra, at 9 and 64-67.
126. Action Plan, n 15 supra, at 16.
127. A recommendation is a non-binding act by the Commission, pursuant to Art 211 EC second indent, to 'deliver opinions on matters dealt with this in this Treaty, if it expressly provides so or if the Commission considers it necessary'.
128. 2004/913/EC of 14 December 2004, available at http://eur-lex.europa.eu/ LexUriServ/site/en/oj/2004/l_385/l_38520041229en00550059.pdf.
129. ibid.
130. ibid, at 8.2.
131. ibid, section 1 and 1.1.
132. ibid, at 55.
133. See, eg, the brief accounts in M. Roe, Political Determinants of Corporate Governance (Oxford University Press, 2003); see, from a political economy perspective, R. Dore, Stock Market Capitalism: Welfare Capitalism (Oxford University Press, 2000).
134. See the classical account by Schmitthoff, op cit n 28 supra; for a more recent observation and overview, see Hopt, op cit n 64 supra, at 175.
135. G. Hertig, 'Western Europe's Corporate Governance Dilemma', (1996) Liber Amicorum Richard Buxbaum 265
136. See Th. Baums, 'Interview: Reforming German Corporate Governance', (2001) 2(12) German Law Journal, available at http://www.germanlawjournal.com/article.php?id=43.
137. See, eg, 'Fat Cats Feeding - Executive Pay', The Economist, 11 October 2003 (US edition), available at http://www.econ.umn.edu/~edgar/ Economist.pdf (observing a 60% increase of media mentionings of 'fat cats' between 2002 and 2003, making executive pay corporate governance's greatest worry); 'CEO Pay: Fat Cats turn to Low Fat', The Economist, 5 March 2005, at 14 (warning against a continuation of 'lavish' payments to CEOs-including ousted ones); see also
138. S. Gopalan, 'Say on Pay, and the SEC Disclosure Rules: Expressive Law and CEO Compensation', (2009) Pepperdine Law Review (forthcoming),
139. L. A. Bebchuk, J. Fried and D. Walker, 'Management and Control of the Modern Business Corporation: Executive Compensation and Takeovers', (2002) 69 University of Chicago Law Review 751,
140. C. Johnson, 'Ebbers Gets 25-Year Sentence For Role in WorldCom Fraud', Washington Post, 14 July 2005, available at http://www.washingtonpost.com/wp-dyn/content/article/2005/07/13/ AR2005071300516.html; see also C. Johnson, 'Enron's Lay Dies of Heart Attack. Convicted Founder Faced Life in Prison', Washington Post, 6 July 2006, available at http://www.washingtonpost.com/wp-dyn/content/article/ 2006/07/05/AR2006070500523.html (reporting on heart attack of convicted former Enron chairman).
141. See Knowledge @ Wharton, SEC's Spotlight on Executive Pay. Will it make a Difference?, 8 February 2006; see also Executive Excess Report: CEO Pay Soars at Companies That Send Jobs Abroad, 22 September 2004, available at http://www.leftcenterleft.com/ 2004-09-22-outsoucing-and-ceo-pay.html.
142. For a concise account of Enron's downfall, see
143. W. W. Bratton, 'Enron and the Dark Side of Shareholder Value', (2002) 76 Tulane Law Review 1275;
144. S. Deakin and S. J. Konzelmann, 'Learning from Enron', (2004) 12 Corporate Governance 134.
145. Besides numerous instances of post-Enron press coverage, see from the academic debate Bebchuk etal, op cit n 102 supra;
146. R. S. Thomas, 'Explaining the International CEO Pay Gap: Board Capture or Market Driven?', (2004) 57 Vanderbilt Law Review 1171;
147. F. G. Snyder, 'More Pieces of the CEO Compensation Puzzle', (2003) 28 Delaware Journal of Corporate Law 129;
148. See only the grand attack by L. A. Bebchuk and J. Fried, Pay Without Performance. The Unfulfilled Promise of Executive Compensation (Harvard University Press, 2004), and the response by
149. W. W. Bratton, 'The Academic Tournament over Executive Compensation', (2005) 93 California Law Review 1557,
150. M. C. Jensen and K. J. Murphy, 'Performance Pay and Top-Management Incentives', (1990) 98 Journal of Political Economy 225;
151. A. Levitt, Corporate Culture and the Problem of Executive Compensation, (2005) 30 Journal of Corporation Law 749;
152. B. Longstreth, 'A Real World Critique of Pay Without Performance', (2005) 30 Journal of Corporation Law 767;
153. S. M. Bainbridge, 'Executive Compensation: Who Decides?' (2005) 83 Texas Law Review 1615;
154. J. McConvill, 'Executive Compensation and Corporate Governance: Rising above the "Pay-for-Performance"Principle', (2006) 43 Am. Bus. L.J. 413-438;
155. J. McConvill, 'Positive Corporate Governance and its Implications for Executive Compensation', (2005) 6 German Law Journal 1777.
156. Bebchuk and Fried, op cit n 102 supra.
157. Bratton, op cit n 107 supra, at 1559.
158. ibid. Bratton notes how, since the 1990s, a shift had taken place towards equity-based CEO compensation; see ibid, at 1558, with references to Jensen and Murphy, op cit n 107 supra.
159. W. Lazonick and M. O'Sullivan, 'Maximising Shareholder Value: A New Ideology for Corporate Governance', in W. Lazonick and M. O'Sullivan (eds), Corporate Governance and Sustainable Prosperity (Palgrave Macmillan, 2002).
160. See
161. M. C. Jensen, 'Value Maximisation, Stakeholder Theory, and the Corporate Objective Function', (2001) 14 Journal of Applied Corporate Finance 8;
162. (1976) 3 Journal of Financial Economics 305;
163. A. A. Alchian and H. Demsetz, 'Production, Information Costs, and Economic Organisation', (1972) 62 American Economic Review 777.
164. B. R. Cheffins, 'Corporations', in P. Cane and M. Tushnet (eds), The Oxford Handbook of Legal Studies (Oxford University Press, 2003), 487.
165. A. A. Berle and G. C. Means, The Modern Corporation and Private Property (Macmillan, 1932).
166. For Berle's early arguments supporting shareholder primacy, see
167. A. A. Berle Jr, 'Non-Cumulative Preferred Stocks', (1923) 23 Columbia Law Review 358;
168. A. A. Berle Jr, 'Problems of Non-Par Stocks', (1925) 25 Columbia Law Review 43;
169. A. A. Berle Jr, 'Participating Preferred Stock', (1926) 26 Columbia Law Review 303;
170. A. A. Berle Jr, 'Non-Voting Stock and Bankers Control', (1926) 39 Harvard Law Review 673;
171. A. A. Berle Jr, 'Corporate Powers as Power in Trust', (1931) 44 Harvard Law Review 1049;
172. A. A. Berle Jr, 'For Whom Corporate Managers are Trustees: A Note', (1932) 45 Harvard Law Review 1365.
173. For a comprehensive assessment of the origins and trajectories of Berle and Means' work, see F. Kennedy-Stewart, A Critical History of the Early American Shareholder Primacy Discourse: A Fresh Examination of the Writings of Adolf A. Berle, E. Merrick Dodd and Henry G. Mann, PhD Thesis Osgoode Hall Law School, draft manuscript on file with author; see also Bratton, op cit n 107 supra, Tsuk, op cit n 38 supra.
174. A. A. Berle, The 20th Century Capitalist Revolution (Harcourt, Brace & World, 1954) (highlighting the political power held and used by large corporations in the contemporary political economy).
175. Cheffins, op cit n 113 supra, at 487.
176. H. Manne, 'Mergers and the Market for Corporate Control', (1965) 73 Journal of Political Economy 110.
177. See, fundamentally,
178. C. M. Tiebout, 'A Pure Theory of Local Expenditures', (1956) 64 Journal of Political Economy 416.
179. See hereto
180. W. J. Carney, 'The Political Economy of Competition for Corporate Charters', (1997) 26 Journal of Legal Studies 303.
181. D. M. Branson, 'A Corporate Paleontologist's Look at Law and Economics in the Seventh Circuit', (1989) 65 Chicago Kent Law Review 745, at 745.
182. Cheffins, op cit n 113 supra, at 494.
183. See, eg,
184. W. W. Bratton and J. A. McCahery, 'Incomplete Contracts Theories of the Firm and Comparative Corporate Governance', (2001) 2 Theoretical Inquiries in Law Article 7 [p 1-38].
185. See hereto
186. P. Ireland, 'Shareholder Primacy and the Distribution of Wealth', (2005) 68 Modern Law Review 49.
187. See, eg,
188. S. J. Stabile, 'One for A, Two for B, and Four Hundred for C: The Widening Gap in Pay Between Executives and Rank and File Employees', (2002) 36 University of Michigan Journal of Law Reform 115.
189. Bratton, op cit n 107 supra, at 1561: 'CEO compensation has ballooned (9-10), with total remuneration increasing by more than eleven times in the past thirty years'.
190. See
191. S. M. Bainbridge, 'Executive Compensation: Who Decides?', (2005) 83 Texas Law Review 1615.
192. Bebchuk and Fried, op cit n 102 supra, at 212-213; Bainbridge, ibid, at 1655 (noting the impediments in particular for small shareholders to make effective use of the wealth of disclosed information, leaving mostly professional, institutional investors to make informed choices on the basis of corporate disclosure).
193. Bainbridge, ibid.
194. For a comparative overview, see
195. L. Enriques and P. Volpin, 'Corporate Governance Reforms in Continental Europe', (2007) 21 Journal of Economic Perspectives 117, at 132-135.
196. R. Romano, 'Empowering Investors: A Market Approach to Securities Regulation', (1998) 107 Yale Law Journal 2359;
197. S. Choi, 'Regulating Investors Not Issuers: A Market-Based Proposal', (2000) 88 California Law Review 279;
198. R. A. Prentice, 'The Inevitability of a Strong SEC', (2006) Cornell Law Review 775,
199. C. A. Williams, 'The Securities and Exchange Commission and Corporate Social Transparency', (1999) 112 Harvard Law Review 1197,
200. Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act, Pub. L. No. 107-204, 116 Stat. 745 (2002) (codified as amended in scattered sections of 15, 18 USC).
201. J. Strasburg, 'Corporate Backlash over Sarbanes-Oxley', San Francisco Chronicle, 23 March 2005, available at http://www.sfgate.com/cgi-bin/ article.cgi?f=/c/a/2005/03/23/BUGVCBR78D43.DTL; T. L. Coenen, 'Reflections on Sarbanes-Oxley Act of 2002', Wisconsin Law Journal, published 13 August 2007, available at http://www.sequence-inc.com/ index.php?option=com_content&task=view&id=43&Itemid=22
202. R. Romano, 'The Sarbanes-Oxley Act and the Making of Quack Corporate Governance', (2005) 114 Yale Law Journal 1521
203. H. T. Hollister, '"Shock Therapy"for Aktiengesellschaften: Can the Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice and Prospects?', (2005) 25 Northwestern Journal of International Law and Business 453,
204. In most US corporate law jurisdictions, the directors of a corporation have the competence to determine the amount of compensation for managers.
205. See the Gesetz über die Offenlegung der Vorstandsvergütungen [VorstOG](Federal CEO Earnings Disclosure Act) of 3 August 2005, published in (2005) I Bundesgesetzblatt (Federal Gazette) 2267, available at http://www.bmj.bund.de/files/-/1382/VorstOG.pdf; for the draft and the ensuing discussion, see Bundesministerium der Justiz (Federal Ministry of Justice), Press release, 11 March 2005, Eckpunkte eines Gesetzentwurfs 'Individulisierte Offenlegung der Gehälter von Vorstandsmitgliedern von Aktiengesellschaften'vorgestellt, available at http://www.bmj.de/enid/0,0/Presse/Pressemitteilungen_58.html?druck= 1&presseartikel_id=1906; see also 'Grüne bemängeln Gesetzentwurf...', Netzeitung, 11 March 2005 (citing the critique voiced by members of the Green Party (Die Grünen) targeting the option for the general shareholder assembly adopting a non-disclosure possibility for management earnings with a three-quarters majority).
206. For recent overviews, see U. Noack and D. Zetzsche, Corporate Governance in Germany: The Second Decade, Center for Business & Corporate Law (CBC) Research Paper Series, (CBC WP No. 0010, 2005), available at http://ssrn.com/abstract=646761
207. P. C. Leyens, 'German Company Law: Recent Developments and Future Challenges', (2005) 6 German Law Journal 1407
208. J. W. Cioffi, Corporate Governance Reform, Regulatory Politics, and the Foundations of Finance Capitalism in the United States and Germany, 01 CLPE Research Paper Series (2005), available at http://www.comparativeresearch.net.
209. R. J. Gilson, 'The Political Ecology of Takeovers: Thoughts on Harmonising the European Corporate Governance Environment', in K. J. Hopt and E. Wymeersch (eds), European Takeovers. Law and Practice (Butterworths, 1992)
210. J. C. Coffee Jr, 'The Future as History: The Prospects of Global Convergence in Corporate Governance and Its Implications', (1999) 93 Northwestern University Law Review 641
211. D. Charny, 'Competition among Jurisdictions in Formulating Corporate Rules: An American Perspective on the "Race to the Bottom"in the European Communities', (1991) 32 Harvard International Law Journal 423.
212. See the critique hereto by
213. D. M. Branson, 'The Very Uncertain Prospect of "Global"Convergence in Corporate Governance', (2001) 34 Cornell International Law Journal 321.
214. Hereto, see, eg,
215. H. T. Hollister, '"Shock Therapy" for Aktiengesellschaften: Can the Sarbanes-Oxley Certification Requirements Transform German Corporate
216. K. Polanyi, The Great Transformation. The Political and Economic Origins of our Time (Beacon Press, 1944), at 56-67 and 57: 'The market pattern...is capable of creating a specific institution, namely the market. Ultimately, that is why the control of the economic system by the market is of overwhelming consequence to the whole organisation of society: It means no less than the running of society as an adjunct to the market'.
217. J. Beckert, The Great Transformation of Embeddedness. Karl Polanyi and the New Economic Sociology, Max-Planck-Institut für Gesellschaftsforschung/Max-Planck-Institute for the Study of Societies, MPIfG Discussion Paper 07/1 (2007); see already
218. M. Granovetter, 'Economic Action and Social Structure: The Problem of Embeddedness', (1985) 91 American Journal of Sociology 481;
219. M. Granovetter, 'The Impact of Social Structure on Economic Outcomes', (2005) 19 Journal of Economic Perspectives 33.
220. A. N. Licht, C. Goldschmidt and S. H. Schwartz, 'Culture, Law, and Corporate Governance', (2005) 25 International Review of Law and Economics 229
221. R. Ellickson, 'Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County', (1986) 38 Stanford Law Review 623;
222. L. Bernstein, 'Opting out of the Legal System: Extralegal Contractual Relations in the Diamond Industry', (1992) 21 Journal of Legal Studies 115.
223. See Hollister,
224. '"Shock Therapy"for Aktiengesellschaften: Can the Sarbanes-Oxley Certification Requirements Transform German Corporate Culture, Practice and Prospects?', (2004) 25 Northwestern Journal of International Law and Business 453.
225. G. Hertig, 'Western Europe's Corporate Governance Dilemma', in T. Baums, K. J. Hopt and N. Horn (eds), Corporations, Capital Markets and Business in the Law. Liber Amicorum Richard M. Buxbaum (Kluwer Law International, 2000), at 266.
226. T. Baums, 'Company Law Reform in Germany', (2003) 3 Journal of Corporation Legal Studies 181.
227. See most recently
228. K. Ibata-Arens, J. Dierkes and D. Zorn, 'Guest Editors' Introduction: Theoretical Introduction to the Special Issue on the Embedded Enterprise', (2006) 7 Enterprise & Society 1,
229. M. Granovetter, 'Economic Action and Social Structure: The Problem of Embeddedness', (1985) 91 American Journal of Sociology 481;
230. See, supra, section II.
231. See, eg,
232. G. Howells and T. Wilhelmsson, 'EC Consumer Law: Has it Come of Age?', (2003) 28 European Law Review 370.
233. E. Wymeersch, Enforcement of Corporate Governance Codes, ECGI Law Working Paper No 46/2005 (2005), at 2.
234. See the brilliant critique by
235. R. L. Hale, 'Coercion and Distribution in a Supposedly Non-Coercive State', (1923) 38 Political Science Quarterly 470.
236. O. Williamson, Markets and Hierarchies. Analysis and Antitrust Implications (Free Press, 1975); see hereto the critique by
237. M. Granovetter, 'Economic Action and Social Structure: The Problem of Embeddedness', (1985) 91 American Journal of Sociology 481,
238. A. C. Cutler, 'Artifice, Ideology and Paradox: The Public/Private Distinction in International Law', (1997) 4 Review of International Political Economy 261.
239. Ibata-Arens, Dierkes and Zorn, op cit n 150 supra, at 7.
240. See, eg, G. Frankenberg, 'Shifting Boundaries: The Private, the Public, and the Welfare State', in M. B. Katz and C. Sachße (eds), The Mixed Economy of Social Welfare (Nomos, 1996);
241. N. Fraser and L. Gordon, 'Dekodierung von "Abhängigkeit". Zur Genealogie eines Schlüsselbegriffs des amerikanischen Wohlfahrtsstaats', (1993) 26 Kritische Justiz 306;
242. See supra.
243. K. Thelen, 'Varieties of Labor Politics in the Developed Democracies', in P. A. Hall and D. Soskice (eds), Varieties of Capitalism (Oxford University Press, 2001).
244. J. W. Cioffi and S. S. Cohen, 'The State, Law and Corporate Governance: The Advantage of Forwardness', in S. S. Cohen and G. Boyd (eds), Corporate Governance and Globalisation. Long Range Planning Issues (Edward Elgar, 2000).
245. P. Manow, 'Welfare State Building and Coordinated Capitalism in Japan and Germany', in W. Streeck and K. Yamamura (eds), The Origins of Nonliberal Capitalism (Cornell University Press, 2001).
246. On this distinction, see foremost P. A. Hall and D. Soskice, 'An Introduction to Varieties of Capitalism', in P. A. Hall and D. Soskice (eds), Varieties of Capitalism. The Institutional Foundations of Comparative Advantage (Oxford University Press, 2001).
247. J. W. Cioffi, 'Corporate Governance Reform, Regulatory Politics, and the Foundations of Finance Capitalism in the United States and Germany', (2006) 7 German Law Journal 533.
248. P. Zumbansen, 'The Parallel Worlds of Corporate Governance and Labor Law', (2006) 13 Indiana Journal of Global Studies 261.
249. M. J. Roe, 'Chaos and Evolution in Law and Economics', (1996) 109 Harvard Law Review 641.
250. German original: Der Aufsichtsrat hat bei der Festsetzung der Gesamtbezüge des einzelnen Vorstandsmitglieds (Gehalt, Gewinnbeteiligungen, Aufwandsentschädigungen, Versicherungsentgelte, Provisionen und Nebenleistungen jeder Art) dafür zu sorgen, daß die Gesamtbezüge in einem angemessenen Verhältnis zu den Aufgaben des Vorstandsmitglieds und zur Lage der Gesellschaft stehen. Dies gilt sinngemäß für Ruhegehalt, Hinterbliebenenbezüge und Leistungen verwandter Art. [My translation, PZ]
251. Global Executive Pay 2006; Senior Executives in the US Earn the Highest Salaries (Finfacts Ireland, 30 March 2006), available at http://www.finfacts.com/irelandbusinessnews/publish/ article_10005367.shtml. J. W. Lorsch, Rising CEO Pay: What Directors Should Do, Harvard Business School Working Knowledge (13 August 2006), available at http://hbswk.hbs.edu/item/5490.html: 'Ask any thoughtful corporate board member what they are most concerned about these days, and it is not Sarbanes-Oxley. It is CEO pay'.
252. U. Papendick, 'Welche Konzernchefs zuviel verdienen' [Which corporate bosses earn too much; my translation, PZ], Manager Magazin, 23 June 2005, available at: http://www.manager-magazin.de/unternehmen/ vorstandsgehaelter/0,2828,361510,00.html; 'Europa Vergleich: Deutsche Bosse verdienen zu viel' [European comparison: German bosses earn too much], Der Spiegel, 23 June 2006, available at http://www.spiegel.de/ wirtschaft/0,1518,422959,00.html.
253. Effective 30 June 2008, the chairmanship will be transferred, see Press Release of 5 June 2008, available at http://www.corporate-governance-code.de/eng/download/ Presseinfo-BMJ-Wechse-Kodex-Kommission_en.pdf.
254. Last amended version (14 June 2007), see the website available at http://www.corporate-governance-code.de/eng/download/ E_Kodex_2007_markiert.pdf. But see the Press Release of the Commission of 18 April 2008, stating that level of compliance has been increasing steadily, available at http://www.corporate-governance-code.de/eng/ download/080418_Pressemitteilung_2008_en.pdf.
255. Federal Minister of Justice, Brigitte Zypries, justified the regulatory advance with the failure of companies to disclose voluntarily their management earnings. See 'Corporate Governance: Zypries fordert gläserne Vorstandsgehälter', Manager-Magazin, 14 May 2005, available at http://www.manager-magazin.de/unternehmen/ vorstandsgehaelter/0,2828,299768,00.html.
256. See VorstOG, n 137 supra.
257. 'Das Prinzip der gesellschaftlichen Selbstregulierung begründet den Erfolg von Corporate Governance. Dieses Prinzip hat zu Recht auch international Anerkennung erhalten und zahlreiche Anhänger gefunden. '[My translation from the German, PZ]
258. See ibid. 'Allerdings halte ich auch in diesem Bereich Regelungen im Rahmen des Kodex für besser als rigide gesetzliche Vorschriften. Denn gerade auch auf diesem sensiblen Feld sind freiwilliges Umdenken und Selbstregulierung vorteilhafter als staatlicher Zwang. Daher bevorzuge ich - trotz vieler anderer Stimmen-weiterhin die Selbstregulierung der Wirtschaft über eine flexible Kodexvorgabe. Es besteht deshalb aus meiner Sicht kein Anlass, die Offenlegungspflicht bereits jetzt nach so kurzer Zeit gesetzlich zu normieren. '[My translation from the German, PZ]
259. 'Politik erhöht Druck auf Unternehmen zur Offenlegung der Manager-Bezüge', Netzeitung.de, 2 August 2004, available at http://www.netzeitung.de/wirtschaft/wirtschaftspolitik/298430.html; see also W. Wiedeking (CEO, Porsche), 'Wie man das Thema auch wendet, es kommt immer Unsinn heraus' [Regardless from which perspective you look at the issue, it always turns out to be nonsense; my translation, PZ], in Frankfurter Allgemeine Zeitung, No 64, 17 March 2005.
260. Baums, op cit n 100 supra.
261. A. Nölting, 'Von gierigen Vorständen und albernen Vergleichen' (Interview with Theodor Baums), Manager Magazin, 26 April 2004, available at http://www.manager-magazin.de/unternehmen/ vorstandsgehaelter/0,2828,305446-3,00.html. See ibid: 'Was die Offenlegungspflicht angeht, so besteht sie nach dem Kodex schon heute. Es gibt aber leider eine Übereinstimmung von etwa zwei Drittel der Dax-Unternehmen darüber, dass man sich an diese Empfehlungen des Corporate-Governance-Kodex nicht hält. Das ist meines Erachtens ein klarer Missbrauch dieses Instruments. Und das bedeutet, dass die Bundesjustizministerin Recht hat mit ihrer Drohung, dass wir eine gesetzliche Vorgabe haben müssen. Die EU-Kommission sieht das ähnlich. '[My translation, PZ]
262. See, supra, section III.B.
263. Baums, op cit n 100 supra.
264. Federal Minister of Justice, Brigitte Zypries, Speech before the Annual Handelsblatt Conference, 18 November 2004.
265. See VorstOG, n 137 supra, Art 1(2), inserting a new para 5 to section 286 Aktiengesetz [Stock Corporation Law].
266. G. Ferrarini, N. Moloney and C. Vespro, Executive Compensation in the EU: Comparative Law and Practice, ECGI Working Paper Series in Law, WP No 09/2003 (2003), at 66.
267. See only
268. A. N. Licht, 'The Mother of all Path-Dependencies: Towards a Cross-Cultural Theory of Corporate Governance Systems', (2001) 26 Delaware Journal of Corporate Law 147.
269. M. J. Roe, 'Comparative Corporate Governance', in P. Newman (ed), The New Palgrave Dictionary of Economics and the Law (Palgrave Macmillan, 1998).
270. Hereto, see, eg,
271. J. W. Cioffi, 'Restructuring "Germany Inc.": The Politics of Corporate Governance Reform in Germany and the European Union', (2002) 24 Law and Policy 355.
272. See the brilliant illustration provided by M. Höpner, 'European Corporate Governance Reform and the German Party Paradox', in Max-Planck-Institut für Gesellschaftsforschung, available at http://www.mpi-fg-koeln.mpg.de/pu/mpifg_dp/dp03-4.pdf.
273. Referring to examples of transnational human rights litigation, see hereto
274. R. Wai, 'Transnational Private Law and Private Ordering in Contested Global Society', (2005) 46 Harvard International Law Journal 471,
275. See, eg, V. Gessner, R. P. Appelbaum and W. F. Felstiner, 'Introduction: The Legal Culture of Global Business Transactions', in V. Gessner, R. P. Appelbaum and W. F. Felstiner (eds), Rules and Networks: The Legal Culture of Global Business Transactions (Hart Publishing, 2001); F. Snyder, Economic Globalisation and the Law in the 21st Century, The Blackwell Companion to Law and Society (Blackwells, 2003); K. Pistor, 'Of Legal Transplants, Legal Irritants, and Economic Development', in P. Cornelius and B. Kogut (eds), Corporate Governance and Capital Flows in a Global Economy (Oxford University Press, 2003).