Corporate Governance in the United States As Seen From Europe

Thursday, January 1st, 1998 at 12:00 am by Gerad Hertig
Gerad Hertig, Corporate Governance in the United States As Seen From Europe, 1998 Colum. Bus. L. Rev. 27

The aim of this article is to offer an “outsider’s” perspective on the need for new or additional “law and economics” research in U.S. corporate governance. The article will focus on the U.S. model of corporate governance, generally, before addressing specific issues that arise under the U.S. model. The structure of this article is as follows. Part II offers an analysis of the importance of public intervention. Essentially, the proposition is that the U.S. corporate governance legal framework assumes market failures to a much greater extent than would be expected from the leading market economy. Part III discusses the proposition that the rules applicable to U.S. corporate governance may not be particularly robust. In Part IV, the multi-disciplinary nature of U.S. academic analysis will be examined. The proposition in the fourth part is that although the United States pioneered the combination of legal, economic, and behavioral analysis of corporate governance (and continues to dominate the field), important internal management issues seem to have been largely ignored by “law and economics” analysts. Finally, Part V addresses two specific issues of corporate governance. The first issue concerns the lack of academic attention that has been given to auditors and “indirect” monitors, in particular, mutual fund investors. The second issue is U.S. fiduciary duties and the difficulty of an outsider to understand why (as is often proclaimed) fiduciary duties differ from the duties of boards under non-U.S. systems.

Author Information

Professor of Law, Swiss Federal Institute of Technology, Zurich.