Political Structure and Corporate Governance: Some Points of Contract Between the United States and England

Thursday, January 1st, 1998 at 12:00 am by Geoffrey Miller
Geoffrey Miller, Political Structure and Corporate Governance: Some Points of Contract Between the United States and England, 1998 Colum. Bus. L. Rev. 51

When viewed against the backdrop of corporate governance systems worldwide, the similarities between England and the United States are more pronounced than the differences. Unlike in Germany, with its emphasis on the two-tier board system and worker participation in management, English and American corporations operate under a unitary board system and do not favor employee codetermination. And unlike in Japan, with its keiretsu system of informal corporate groups cemented by cross holdings of stock, English and American corporations operate under a regime of explicit contracts and free-standing firms. Unlike most other countries in the world, including Germany and Japan, English and American corporations are not usually locked into financing relationships with lead banks. English and American corporations are unique in the world, or nearly so, in the degree to which they turn to impersonal securities markets for financing rather than to banks. While it is relatively easy to identify salient differences between the English and U.S. systems and the rest of the developed world, it is more difficult to identify major contrasts within the Anglo-American world itself. Yet such differences do exist, although they are often matters of degree rather than kind. In this paper, I consider two areas of difference: rules on derivative litigation and those on corporate takeovers. It turns out that England has a more robust and less regulated takeover market than the United States, while the U.S. is more permissive towards derivative litigation. This paper is organized as follows. Part I contains a brief summary of U.S. and English takeover law. Part II describes some of the differences in the law related to derivative litigation. Part III argues that the differences between England and the United States stem, at least in part, from the different political structures in which they arise.

Author Information

Professor of Law and Director, Center for the Study of Central Banks, New York University Law School.