I'm reading Corporate Governance in the Shadow of the State
This book provides a fundamental re-conceptualization of the main aspects of corporate governance law and regulation in the UK, with the aim of highlighting the significant and integral role of the political State in the corporate rule-making process. It demonstrates that the key laws and regulations pertaining to corporate governance in the UK are motivated, less by the private search for efficient institutional structures, and more by the public goal of ensuring a form of quasi-democratic legitimacy consistent with the State's role as ultimate bearer of economic risk in respect of large, socially significant corporate organizations. The book argues that the legitimate function of corporate law is not simply that of mimicking the market by providing the sets of rules which participants themselves would rationally have bargained for in the absence of a formal legal framework. Rather, its analysis portrays the corporate rule-making process as a complex hybrid of publicly- and privately-driven pressures motivating compliance with accountability norms and entailing continual adaptation of institutional structures to dual political and economic forces. This has the dual effect of widening the ambit of the State's legitimate policy-making role in corporate governance, while at the same refuting the purported survival value of prevailing governance structures in British public companies.
And from the publisher's website:
Over recent decades corporate governance has developed an increasingly high profile in legal scholarship and practice, especially in the US and UK. But despite widespread interest, there remains considerable uncertainty about how exactly corporate governance should be defined and understood. In this important work, Marc Moore critically analyses the core dimensions of corporate governance law in these two countries, seeking to determine the fundamental nature of corporate governance as a subject of legal enquiry. In particular, Moore examines whether Anglo-American corporate governance is most appropriately understood as an aspect of 'private' (facilitative) law, or as a part of 'public' (regulatory) law. In contrast to the dominant contractarian understanding of the subject, which sees corporate governance as an institutional response to investors' market-driven private preferences, this book defines corporate governance as the manifestly public problem of securing the legitimacy – and, in turn, sustainability – of discretionary administrative power within large economic organisations. It emphasises the central importance of formal accountability norms in legitimating corporate managers' continuing possession and exercise of such power, and demonstrates the structural necessity of mandatory public regulation in this regard. In doing so it highlights the significant and conceptually irreducible role of the regulatory state in determining the key contours of the Anglo-American corporate governance framework. The normative effect is to extend the state's acceptable policy-making role in corporate governance, as an essential supplement to private ordering dynamics.
As a committed contractarian, of course, I'm approaching the normative argument with a certain amount of skepticism. After reading the first couple of chapters, however, I must commend Moore for having written a very readable, balanced, nuanced, thoughtful analysis of the state of corporate governance. I'm looking forward to reading the whole thing and considering how it might inform my own analysis of the issues.
