Convergence and Persistence in Corporate Law and Governance

This paper, which will be the basis for a chapter in the forthcoming OXFORD HANDBOOK OF CORPORATE LAW AND GOVERNANCE (Jeffrey Gordon and Georg Ringe, eds.), surveys the extent of convergence in corporate law and governance over the past 15 years. The paper assesses the efforts to measure convergence through the coding of national legal regimes and other comparative measures, finding “divergence in convergence.” Among its conclusions: The decline in cross-listings on US stock markets reflects a “leveling up” of corporate governance standards in emerging market economies and financial globalization’s development of credible substitutes for the US’s disclosure regime. Much of convergence has resulted from the work of global governance institutions reacting to an assessment that poor corporate governance played a major role in the East Asian Financial Crisis and is otherwise implicated in financial stability. The relative lack of convergence within the EU is less because of the efficiencies of local regimes and more because of the desire of Member States to throw sand-in-the-gears of economic and political integration by impeding the growth of trans-EU firms. Finally, the latest turn in the “End of History” debate is less about the primacy of “shareholder value” and more about “which shareholders.” The combination of long-standing family ownership and the reconcentration of public equity ownership in institutional investors has created a significant shareholder constituency that includes “stability” in its maximizing function, not just “efficiency.”