Taking Shareholder Protection Seriously? Corporate Governance in the United States and Germany

Taking Shareholder Protection Seriously? Corporate Governance in the United States and Germany

Theodor Baums, Kenneth Scott

Series number :

Serial Number: 
017/2003

Date posted :

November 01 2003

Last revised :

December 06 2018
SSRN Share

Keywords

  • Company Law (United States • 
  • Germany) • 
  • Corporate Governance United States

The paper undertakes a comparative study of the set of laws affecting corporate governance in the United States and Germany, and an evaluation of their design - if one assumes that their objective were the protection of the interests of minority outside shareholders.

The rationale for such an objective is reviewed, in terms of agency cost theory, and then the institutions that serve to bound agency costs are examined and critiqued. In particular, there is discussion of the applicable legal rules in each country, the role of the board of directors, the functioning of the market for corporate control, and (briefly) the use of incentive compensation. The paper concludes with the authors' views on what taking shareholder protection seriously, in each country's legal system, would require.

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Published in

Published in: 
Publication Title: 
American Journal of Comparative Law
Description: 
Vol. 53, Winter 2005

Authors

Professor
Real name: 
Theodor Baums
Fellow, Research Member
Johann Wolfgang Goethe University, Frankfurt am Main
Real name: 
Kenneth Scott