The standard approach to the legal foundations of corporate governance is based on the view that corporate law promotes separation of ownership and control by protecting non-controlling shareholders from expropriation. This book takes a broader perspective by showing that investor protection is a necessary, but not sufficient, legal condition for the efficient separation of ownership and control. Supporting the control powers of managers or controlling shareholders is as important as protecting investors from the abuse of these powers.
Rethinking Corporate Governancereappraises the existing framework for the economic analysis of corporate law based on three categories of private benefits of control. Some of these benefits are not necessarily bad for corporate governance. The areas of law mainly affecting private benefits of control – including the distribution of corporate powers, self-dealing, and takeover regulation – are analyzed in five jurisdictions, namely the US, the UK, Italy, Sweden, and the Netherlands. Not only does this approach to corporate law explain separation of ownership and control better than just investor protection; it also suggests that the law can improve the efficiency of corporate governance by allowing non-controlling shareholders to be less powerful.
Table of Contents
Introduction 1. Corporate Governance: Theory and Evidence 2. Private Benefits of Control 3. The Law and Economics of Control Powers: A theoretical Framework 4. Legal Distribution of Corporate Powers 5. How to Cope with Self-Dealing 6. Regulation of Related-Party Transactions: A Comparative Analysis 7. Takeovers: Law and Economics 8. Comparative Takeover Law 9. Concluding Remarks
Alessio M. Pacces is Professor of Law and Finance at the Erasmus School of Law, Erasmus University Rotterdam and since 2009 he has been a Research Associate of the European Corporate Governance Institute (ECGI). Before joining academia, Professor Pacces was a senior researcher in the Law and Economics Research Department of the Bank of Italy, a financial economist at the Italian Securities Authority (Consob), and he served as junior officer in the Italian Financial Police. His research is mainly concerned with the economic analysis of corporate law and of financial regulation.
"Alessio Pacces’ book represents a substantial contribution to the growing field of law and finance. It sheds new light on the problems of corporate governance from both economic and legal perspectives in countries with concentrated corporate ownership."
Andrei Shleifer, Professor of Economics, Harvard University
"Alessio Pacces has written an important, thought provoking book on corporate governance that invites researchers in law and finance to rethink the relevance and regulation of control powers, in particular in the context of private benefits of control, conflicts of interest, self-dealing and takeovers."
Klaus J. Hopt, Professor and Director (emeritus), Max Planck Institute for Comparative and International Private Law, Hamburg