State Ownership and Corporate Governance

State ownership of publicly-traded corporations remains pervasive around the world, and has been increasing in recent years. Existing literature focuses on the implications of government ownership for corporate governance and performance at the firm level. This Article, by contrast, explores the different but equally important question of whether the presence of the state as a shareholder can impose negative externalities on the corporate law regime available to the private sector. Drawing from historical experiments with government ownership in the United States, Brazil, China, and Europe, this study shows that the conflict of interest stemming from the state’s dual role as a shareholder and regulator can influence the content of corporate laws to the detriment of outside investor protection and efficiency. It thus addresses a gap in the literature on the political economy of corporate governance by incorporating the political role of the state as shareholder as another mechanism to explain the relationship between corporate ownership structures and legal investor protection. Finally, this Article explores the promise of different institutional arrangements to constrain the impact of the state’s interests as a shareholder on the corporate governance environment, and concludes by offering several policy recommendations

The Role of the State in Contract Law: The Common-Civil Law Divide

How do the laws of contract differ across jurisdictions? This question has attracted a tremendous amount of interest over time. In fact, for most of the history of comparative law as a discipline, contract law was the main area of focus of comparative legal study

The Rise of International Corporate Law

Comparative corporate governance has focused either on prevailing differences across legal systems or on spontaneous legal transplants of foreign institutions in response to global competition. This Essay argues that corporate law today is not only a product of the invisible hand of the market but also of the soft (and not-so-soft) hands of international organizations and standard setters. By tracing the emergence of international corporate law (ICL) since the Asian crisis of the late 1990s, it shows how the IMF, the OECD, the World Bank, and the United Nations, among several other international players, have helped shape legal reforms and corporate governance developments around the world. The observed influence of ICL ranges from the impulse for independent directors and the control of related-party transactions to the growth of ESG investment factors and human rights policies. The rise of ICL responds to interjurisdictional externalities and nationalist bias of domestic regimes that have been largely neglected by prevailing theories, which failed to predict and notice the strong push for international coordination and standard setting in the field. ICL has also gone beyond merely prescribing an Anglo-Saxon model of corporate governance to promote legal innovations that place the United States on the receiving end of international pressure. Legal implants from ICL, rather than legal transplants from a foreign jurisdiction, are an increasingly relevant force behind corporate governance change. While ICL has been influential, its efficacy and normative vision face challenges. The time has come to move beyond an exclusively comparative focus to also scrutinize the potential and limits of corporate lawmaking at the international level

Pay, Risk and Stewardship: Private Sector Architecture for Future Capital Markets

The recent financial crisis revealed a massive failure of institutions that populate the world’s capital markets. Banks, investors, ratings agencies, regulators and numerous other players demonstrated that confidence in market responses was misplaced. The loss of faith in capital market institutions has represented a significant hurdle to recovery as financial institutions continue to be wary of one another, and the public is wary of all of them. Restoring trust in the system requires two distinct pillars of reform. The first pillar, reform of the financial regulatory system, both nationally and globally, has received most of the attention so far. Many organizations, such as the G20, the OECD, the US Treasury, professional bodies, universities and free-standing think-tanks, are assessing proposed reforms of laws and regulations, new roles of regulatory agencies, changes in the supervisory process, and the potential need for a unified and overarching international regulatory system. The second pillar, reform initiatives and actions by the private sector for the private sector, has been largely ignored to date, as faith in these institutions has been shaken. However, trust in capital markets cannot be restored without the action of private sector institutions. The crisis exposed multiple flaws in the existing system, from the apparent inability of boards of directors to manage risk, to the poor stewardship of institutional investors, to compensation and incentive systems that many suggest may have exacerbated risk. Each of these flaws must be taken seriously and addressed thoughtfully

Law and Economics in the South: The Role of Brazilian Courts

Conventional wisdom holds that law and economics is either embryonic or nonexistent outside of the United States generally and in civil-law jurisdictions in particular. Existing explanations for the assumed lack of interest in the application of economic reasoning to legal problems range from the different structure of legal education and academia outside of the United States to the peculiar characteristics of civilian legal systems. This paper challenges this view by documenting and explaining the growing use of economic reasoning by Brazilian courts. We argue that, given the ever-greater role of courts in the formulation of public policy, the application of legal principles and rules increasingly calls for a theory of human behavior (such as that provided by economics) to help foresee the likely consequences of different legal regimes. Consistent with the traditional role of civilian legal scholarship in providing guidance for the practice of law, the further development of law and economics in Brazil is therefore likely to be mostly driven by judicial demand

Governance Challenges of Listed State- Owned Enterprises Around the World: National Experiences and a Framework for Reform

Despite predictions of their demise in the aftermath of the collapse of socialist economies in Eastern Europe, state-owned enterprises (SOEs) are very much alive in the global economy. The relevance of listed SOEs— firms subject to government ownership, but with a portion of their shares traded on public stock markets— has persisted and even increased around the world, as policymakers have encouraged the partial floating of SOE shares either as a first step toward, or as an alternative to, privatization. In this Article, we evaluate the governance challenges associated with mixed ownership of enterprise, and examine a variety of national approaches to the governance of listed SOEs, with a view to framing a robust policy discussion in many countries where SOE reform is a topic of major significance. We describe the evolution and current status of the institutional framework applicable to listed SOEs in eight different jurisdictions which reflect a variety of economic, legal, and political environments: France, the United States, Norway, Colombia, Brazil, Japan, Singapore, and China. We leverage the lessons from this comparative analysis by critiquing the policy prescriptions of international agencies such as the OECD and framing our own policy suggestions

Governance Challenges of Listed State- Owned Enterprises Around the World: National Experiences and a Framework for Reform

Despite predictions of their demise in the aftermath of the collapse of socialist economies in Eastern Europe, state-owned enterprises (SOEs) are very much alive in the global economy. The relevance of listed SOEs— firms subject to government ownership, but with a portion of their shares traded on public stock markets— has persisted and even increased around the world, as policymakers have encouraged the partial floating of SOE shares either as a first step toward, or as an alternative to, privatization. In this Article, we evaluate the governance challenges associated with mixed ownership of enterprise, and examine a variety of national approaches to the governance of listed SOEs, with a view to framing a robust policy discussion in many countries where SOE reform is a topic of major significance. We describe the evolution and current status of the institutional framework applicable to listed SOEs in eight different jurisdictions which reflect a variety of economic, legal, and political environments: France, the United States, Norway, Colombia, Brazil, Japan, Singapore, and China. We leverage the lessons from this comparative analysis by critiquing the policy prescriptions of international agencies such as the OECD and framing our own policy suggestions