Comparative Corporate Governance (LAWS0263)

This module provides students with a thorough understanding of the regulatory framework pertaining to the governance of corporations, as well as topical issues at the centre of the current policy debates in corporate governance.

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This course deals with central issues in corporate governance from an interdisciplinary and comparative perspective. It will provide a thorough introduction to key principles of corporate law pertaining to the governance of corporations, such as directors’ duties and shareholder rights, as well as best practice standards laid down in corporate governance codes, which have become ubiquitous in corporate governance regulation. The module will furthermore examine topical problems at the centre of the current policy debates, including shareholder activism and short termism, the regulation of executive remuneration, corporate social responsibility, environmental, social and corporate governance investing and reporting, and the debate about corporate purpose.

The module will take the central economic problem in corporations, the managerial agency problem, as its starting point in analysing regulatory solutions that have been developed in response to the perceived lack of effective control of corporate managers. We will reflect on important contributions from economics and finance that have shaped the corporate governance movement since its inception in the 1970s and influenced policymaking in critical areas. We will also explore the link between corporate governance regulation and firm performance, which can be taken as an indicator (among others) of the efficiency of regulation. Background knowledge in economics or finance is not required, but students should be willing to engage with the finance literature.

The module’s focus is on the Anglo-American regulatory landscape. We will study in detail Delaware law as the most influential US company law jurisdiction and compare regulatory mechanisms developed in the United States with the law in the United Kingdom. In addition, we will make references to continental European legal systems and regulatory initiatives at the EU level where appropriate.

Topics to be covered in the module include:

• Corporate purpose
• Distribution of corporate power between shareholder and directors
• Board structure regulation, including board diversity and stakeholder representation
• Corporate governance and firm performance
• Directors’ duties
• Enforcement of duties
• Common ownership
• Shareholder activism and short-termism
• Executive remuneration
• Market for corporate control
• Corporate social responsibility
• ESG (environmental, social and corporate governance) investing and reporting
• Internal controls, ethics and risk management

Recommended Materials

• Andreas Cahn and David C. Donald, Comparative Company Law (2^nd ed., Cambridge University Press 2018)
• Carsten Gerner-Beuerle and Michael Schillig, Comparative Company Law (Oxford University Press 2019)
• Marc Moore and Martin Petrin, Corporate Governance: Law, Regulation and Theory (Palgrave 2017)

Module reading lists and other materials will be provided via online module pages once students have made their module selections upon enrolment.

Preliminary Reading

• Margaret Blair, ‘What must corporate directors do? Maximizing shareholder value versus creating value through team production’ (2015), available at https://www.brookings.edu/wp-content/uploads/2016/06/Blairrevised-61115.pdf
• Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit (Cambridge University Press 2020)
• Reinier Kraakman et al., The Anatomy of Corporate Law: A Comparative and Functional Approach (3^rd ed., Oxford University Press 2017), chapter 1
• Colin Mayer, Prosperity: Better Business Makes the Greater Good (Oxford University Press 2018)
• Colin Mayer, ‘The Future of the Corporation and the Economics of Purpose’ (2021) 58 Journal of Management Studies 887
• Lynn Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler 2012); summary available at https://www.europeanfinancialreview.com/the-shareholder-value-myth-2/

Key information