OXFORD UNIVERSITY

BCL/MJUR/MLF

COMPARATIVE CORPORATE GOVERNANCE

2021

John Armour (JA)

Professor of Law and Finance
Faculty of Law
john.armour@law.ox.ac.uk

Paul Davies
Allen & Overy Professor of Corporate Law Emeritus
Faculty of Law
paul.davies@law.ox.ac.uk

Horst Eidenmüller
Professor of Commercial Law
St. Hugh’s College
horst.eidenmueller@law.ox.ac.uk

Luca Enriques (LE) (convenor)

Professor of Corporate Law
Jesus College
luca.enriques@law.ox.ac.uk

Geneviève Helleringer (GH)

IECL Lecturer in French Law and Business Law
Lady Margaret Hall
genevieve.helleringer@law.ox.ac.uk

Georg Ringe (GR)

Visiting Professor of Law
Professor of Law & Economics, University of Hamburg
georg.ringe@uni-hamburg.de

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 BCL/MJUR/MLF COMPARATIVE CORPORATE GOVERNANCE

Teaching Format

Lectures
There will be no lectures for this course. However, introductory videos for each of the topics
are available in Canvas. These videos are intended to give an overview of the relevant topic.
We encourage you to watch them prior to the relevant seminars.

Seminars
The seminar topics are listed on the following page. Seminars will commence on Wednesday
of Week 1 MT (13 October), and will be held at 9-11am (classroom to be announced).
The Zoom meeting hyperlink for all seminars is https://law-oxford.zoom.us/j/95223877506.
Needless to say, we expect all students who are in Oxford and have no specific reasons not
to attend in person to do so.
Questions for preparation prior to the seminars are set out after the relevant readings
below.

Tutorials
A course of 2 tutorials will be offered during the term, in weeks 4 and 8. Tutorials will be
arranged via a sign-up list available through Canvas. Each student is required to submit two
tutorial essays during this course.

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 Seminars List

1. Corporate governance and corporate law: theory (JA/LE)

2. Corporate governance and corporate law: evolution (JA/LE)
3. Corporate purpose, shareholders and stakeholders (GH/JA)
4. Internal governance at companies with dispersed ownership (LE/JA)
5. Internal governance at companies with concentrated ownership (LE/GH)
6. Corporate governance and externalities (JA/GH)
7. Corporate governance, globalization, and nationalism (LE/GR)
8. Corporate governance and innovation (LE/JA)

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 General Reading List

Note on reading lists: The lists tend to be long and are intended to offer a comprehensive
overview of the field for each topic. Starred items (*) are compulsory reading. Non-starred
items should be thought of as a resource you can dip into for topics that are of particular
interest or if you wish to do further research in the field. We may change items on the
reading list during the term to reflect new materials but will give you plenty of notice of any
changes.

Most hyperlinks to published articles are to the articles as published and in some cases you
will need an Oxford network access (or VPN) to download them. In most cases, they are also
freely available online as working papers.

1. Recommended course readings

A good general introduction to corporate governance from an economics perspective is still
M Becht, P Bolton, and AA Röell, ‘Corporate Governance and Control’ (2002).

On comparative corporate law:

*J Armour, L Enriques and others, The Anatomy of Corporate Law, 3rd ed (OUP 2017)

2. Statutes
If you do not already have a copy of UK company law statutes in relation to other courses
you are taking, you can rely on the electronic version linked below. For statutes in other
jurisdictions, please see the links below.
3. Corporate Governance Codes
An updated list of corporate governance codes and stewardship codes from a number of
jurisdictions is available on the European Corporate Governance Institute’s website, here.
4. Internet Materials
Many primary and secondary legal sources can be accessed through the University’s e-
resources. You can access these via the Bodleian Library’s SOLO system or via BrowZine.

Secondary Sources. The most direct route to many academic articles, especially in the
interdisciplinary and/or US literature is often via Google Scholar. Start by typing the
surnames of the authors and see if this gives you a result. If not, try adding a couple of
keywords from the title as well. If you are working from an ox.ac.uk IP address, you will see
a link saying “Find it @ Oxford” to the right of results accessible via the Bodleian’s online
access. Clicking on this will take you through to the underlying databases where the paper
can be found. If you are working from outside Oxford, you can install Virtual Private Network
software to get the same effect.

Articles published in UK legal journals are often available online via HeinOnline, WestlawUK
or LexisNexisButterworths (all accessible via the Bodleian library’s e-resources here).

The Oxford Business Law Blog carries updates on important scholarly contributions and
analysis of developments in corporate law in several jurisdictions. You can subscribe to a
daily or weekly newsletter with links to new posts.

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United Kingdom

The UK comprises several jurisdictions, but we will focus on the law of England and Wales,
the most important of these for the purposes of company law (in fact, neither Scotland nor
Northern Ireland is significantly different from English law in this field).

Primary Legislation. The key primary legislation is the Companies Act 2006. There are a set
of detailed Explanatory Notes which accompany the Act and may be of assistance in some
contexts.

Listing Rules. Provisions dealing with corporate governance are also found in the UK Listing
Rules (available here under Listing, Prospectus and Disclosure).

United States

Primary Legislation. The US is a federal legal regime. However, much of corporate law is left
to the states. We will focus our attention on the corporate law of Delaware, the state in
which the majority of US publicly traded corporations have chosen to incorporate. The
Delaware General Corporation Law (DGCL) is the key statute. Professor Holger Spamann of
Harvard Law School maintains a simplified version of the DGCL (and the most important
federal proxy rules) for his students. You may find it useful. It is available here.

In addition, we will supplement the DGCL with Federal laws where appropriate, particularly
certain securities law disclosure obligations imposed under the Securities Act 1933 and the
Securities Exchange Act 1934 and substantive corporate governance rules imposed by the
Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act of 2010. Up-to-date versions of all
relevant legislation can be found online e.g. in the SEC’s website, here.

Procedural Rules. Rules of Delaware State Courts.

Listing Rules. Further provisions dealing with corporate governance are found in the New
York Stock Exchange’s Listed Company Manual (and especially in its Section 3). (Other US
exchanges have similar rules.)

Commentary. Like the Oxford Business Law Blog, the Harvard Law School Corporate
Governance Forum and the Columbia Law School Blue Sky Blog also carry updates on
important scholarly contributions and analysis of developments.

Case Law. The Delaware Corporation Law Resource Center is a collection of resources for
students of landmark Delaware cases and statutory developments since 1967. The site
includes video recordings and transcripts of interviews of lawyers and judges who
participated in the cases, narrative documentary videos describing the cases, and, for each
case, texts of court opinions, selected briefs, and other documents generated in the case.

Germany

Primary Legislation. The Aktiengesetz (Act on public limited liability company, ‘AktG’) is the
principal statutory source. An English translation of the Aktiengesetz is available here.
Another important statute is the Codetermination Act (Mitbestimmungsgesetz, ‘MitbestG’),

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available on Canvas Germany - Codetermination Act. The German Civil Code (‘BGB’) is
available in English translation. The Takeover Code (‘WpÜG’) is available in English here. The
Securities Trading Act (‘WpHG’) is available here. Some other statutes are available via the
German Law Archive.

An English version of the most recent edition of the German Corporate Governance Code
(GCGC) is available here.

Secondary materials. The German Law Journal, published online, carries high-quality
articles in English on topics relating to German law.

European Union

Primary legislation and case-law can be accessed via the EUR-Lex portal (but if you know
what you are looking for, just google the name of the directive or regulation and you will
easily find the text). Company law legislation is also accessible via the European
Commission website.

Other jurisdictions

France:

Primary legislation. Company law is found in Book II of the Code de Commerce (Commercial
Code), which is available in English translation here.

Italy

Primary legislation. The Italian company law is codified in Book 5 of the Civil Code. A partial
translation has been uploaded to the course web page. Rules on listed companies
(legislative decree 58/1998, Part IV) in English translation are available here.

India

Primary legislation. The Indian Companies Act 2013 is available here.

Brazil

Primary legislation. Brazilian legislation on corporations and securities markets is available

in English translation here.

5. General Reading List: Reference

A list of books that are of general relevance to the course is at the end of this reading list.
This may be useful if you wish to conduct further research into a topic going beyond the
materials outlined in the relevant seminar reading list.

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 COMPARATIVE CORPORATE GOVERNANCE

SEMINARS

Seminar 1: Corporate governance and corporate law: theory

In this topic we examine, from a theoretical perspective, the idea of corporate governance
and the nature of the problems to which it responds. We consider the role played by
corporate law in particular in supporting corporate governance arrangements, and then
begin to explore the variety of different corporate governance arrangements across
countries.

Overview: M Saez and M Urtiaga, The Law and Economics of Comparative Corporate Law,
ECGI Working Paper No 591/2021 (2021).

(1) The problems to which corporate governance responds

*Armour, Enriques and others, Anatomy, Ch 2.
Shleifer and Vishny, ‘A Survey of Corporate Governance’, (1996) 52 Journal of Finance 737,
pp. 737-750.
Zingales, ‘Corporate Governance’, New Palgrave Dictionary of Economics and Law (1998)
Freeman and Reed, ‘Stockholders and Stakeholders: A New Perspective on Corporate
Governance’ (1983) California Management Review 88

(2) What is the role of corporate law?

*Armour, Enriques and others, The Anatomy of Corporate Law, 1-24.
Shleifer and Vishny, ‘A Survey of Corporate Governance’, (1996) 52 Journal of Finance 737,
pp. 750-761.
M Klausner, ‘Fact and Fiction in Corporate Law and Governance’ (2013) 65 Stanford Law
Review 1325

(3) How is corporate governance different across countries?

Hopt, ‘Comparative Corporate Governance: The State of the Art and International
Regulation’ (2011) 59 American Journal of Comparative Law 1, pp. 19-56.
*M Isaksson and S Çelik, ‘Who Cares? Corporate Governance in Today’s Equity Markets’
OECD Corporate Governance Working Paper No 8 (2013).

(4) Why are corporate governance arrangements different?

*Schmidt and Spindler, ‘Path Dependence and Complementarity in Corporate Governance’
in Gordon and Roe (eds), Convergence and Persistence in Corporate Governance (2004), 114
Cheffins, The History of Corporate Governance, in Oxford Handbook of Corporate
Governance (2013)

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 Questions for Seminar 1:
Corporate governance and corporate law: theory

A. The problems to which corporate governance responds

1. What are ‘agency costs’ as understood by economists? In what ways is this concept
relevant to understanding the operation of business organisations?

2. If a firm’s shareholders are understood as the principals and its managers as agents,
what is the function of corporate governance?

3. Who or what are a firm’s ‘stakeholders’? If a wide range of stakeholders are taken into
consideration, what is the function of corporate governance?

B. Corporate law’s role

4. What do you see as the difference between corporate governance and corporate law?
Which, if any, institutions of corporate governance are not part of corporate law?

5. How does corporate law seek to facilitate effective corporate governance?

6. If there were no ‘corporate law’, how much of what this body of law currently does
could be achieved by writing a series of complex contracts between shareholders,
creditors, directors and any other relevant participants in business firms? What
purpose is served by the state specifying rules of ‘corporate law’ that cover matters that
could be dealt with by private contract in this way?

7. What do the authors of the Anatomy of Corporate Law mean when they say that a legal
rule is ‘functional’? How, if at all, can one test whether a legal rule is in fact functional?

C. Comparing governance regimes

We will return to these issues in more detail later in the course, so the following questions
are really just introductory forays:

8. How do you think the problems for corporate governance vary across countries?

9. How does the way in which corporate governance institutions respond to these
problems vary across countries?

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 Seminar 2: Corporate governance and corporate law: evolution

In this topic we explore the interactions between corporate governance and the real
economy over time. We focus on three distinct claims about how corporate law and
governance evolve: (i) ‘market-based’ theories which posit that market forces lead
corporate governance to evolve inexorably towards the best possible form; (ii) theories
focusing on ‘legal origins’, which assert that a legal system’s regulatory style as a civilian or
a common system has a powerful and lasting influence on the content of its laws and other
institutions; and (iii) ‘political economy’ theories, which focus on the role played by interest
groups in changing corporate governance institutions.

(1) Market-based theories

*Hansmann and Kraakman, ‘The End of History for Corporate Law’ (2001) 89 Georgetown
LJ 439 (see also id. ‘Reflections on the End of History for Corporate Law’ in Rashid and
Yoshikawa (eds), Convergence of Corporate Governance: Promise and Prospects (2012)).
*M Klausner, ‘Fact and Fiction in Corporate Law and Governance’ (2013) 65 Stanford Law
Review 1325

(2) ‘Legal origins’

La Porta, Lopes-de-Silanes, and Shleifer, ‘The Economic Consequences of Legal Origins’
(2008) 46 Journal of Economic Literature 285

(3) Political economy theories

Gourevitch, ‘The Politics of Corporate Governance Regulation’, (2002) 112 Yale LJ 1829
*PD Culpepper, Quiet Politics and Business Power: Corporate Control in Europe and Japan
(Cambridge UP, 2011), Ch 1
Armour et al, ‘Putting technology to good use for society: the role of corporate, competition
and tax law’, 2018 (6) Journal of the British Academy 285, section 4 (pp. 18-24 of the working
paper)

(a) Interaction with market forces

PA Hall and DW Gingerich, ‘Varieties of Capitalism and Institutional Complementarities in
the Political Economy: An Empirical Analysis’ (2009) 39 British Journal of Political Science
449.
*Wolf-Georg Ringe, ‘Changing Law and Ownership Patterns in Germany: Corporate
Governance and the Erosion of Deutschland AG’, (2015) 63 American Journal of
Comparative Law 493.

(b) Interaction with legal origins

BR Cheffins, ‘Does Law Matter? The Separation of Ownership and Control in the United
Kingdom’ (2001) 30 Journal of Legal Studies 459.
JC Coffee, ‘The Rise of Dispersed Ownership: The Roles of Law and the State in the
Separation of Ownership and Control’ (2001) 111 Yale LJ 1.

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 Questions for Seminar 2:
Corporate governance and corporate law: evolution

A. General

1. What is the difference between studying taxonomy and studying evolution? For the
purposes of this course, why should we care?

B. ‘Market-based’ theories

2. For proponents of ‘market-based’ theories of the development of corporate

governance, what forces shape the evolution of corporate governance institutions?
What effect may the opening (closing) of markets around the world be expected to have
on the diversity of national corporate governance institutions?

3. What is the benchmark of the ‘success’ or ‘functionality’ of corporate governance, if

markets drive its evolution?

4. How might the existence of complementarities between various aspects of a system of

corporate governance (for example, between industrial structure/specialization and
corporate law) affect the operation of the processes described in your answer to
question 2?

D. ‘Legal origins’ theories

5. As a matter of theory, how is a country’s legal origin said to affect the efficacy of its legal
rules in protecting investors? Do you find the empirical methodology of the ‘legal
origins’ theorists convincing?

6. In the US and UK, which came first: stock market development or meaningful legal
protection of investors? Does this ‘prove’ or ‘disprove’ the legal origins view?

7. If legal origins are important determinants of the efficacy of systems of corporate

governance, what policy implications does this have for countries wishing to improve
their systems?

E. ‘Political economy’ theories

8. According to Mark Roe, what aspects of a nation’s system of corporate governance are
affected by domestic politics?

9. How might politics affect (a) ownership structure? (b) regulation devolved to an expert
decision-maker? (c) self-regulation?

10. If political economy is an important determinant of corporate governance, what

implications, if any, does this have for law reform?

11. What is the benchmark of the ‘success’ or ‘functionality’ of corporate governance

systems, if legal origins or political economy drive their evolution?

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 Seminar 3:
Corporate purpose, shareholders and stakeholders

A lively debate has recently been taking place in many jurisdictions about how shareholder
primacy, the dominant corporate culture for some time, might be oblivious to long term and
sustainability and, therefore, harmful to stakeholders. Private initiatives have expressed
their support for stakeholderism and public initiatives have followed, including new
disclosure requirements and grounds for directors’ liability. In parallel strong claims have
been made in favour of shareholder primacy and market discipline.

Against this background, we are particularly interested in mapping this seminar discusses
which group gains what from shareholderism and stakeholderism, and the genealogy of
each perspective. We also strive to understand what are the concrete consequences of each
perspective, as well as their limits – with a specific interest in the case of employees as
stakeholders.

(1) Shareholders
*J Armour, Shareholder Rights, 36 Oxford Review of Economic Policy 314 (2020)

(2) Shareholders primacy

Lipton, Ann M. What We Talk About When We Talk About Shareholder Primacy? Case W.
Res. L. Rev. 69 (2018): 863
*B Cheffins, Stop Blaming Milton Friedman! 98 Washington University Law Review 1607
(2021)

(3) Stakeholders and corporate social responsibility

E Chaffee, The Origins of Corporate Social Responsibility, 85 University of Cincinnati Law
Review (2017)
L Bebchuk, R Tallarita, The Illusory Promise of Stakeholder Governance, 106 Cornell Law
review 91 (2020)
A. Ferrell et al., Socially responsible firms, Journal of Financial Economics 122 (2016) 585–
606

(4) Purpose of the corporation

CA 2006 s 172
UK Corporate Governance Code – 1. Board Leadership and Company purpose
German AktG § 76 and 93; German GmbHG § 43
French Commercial Code art L225-25 (board of directors) art L225-64 (management
board)
Dodge v. Ford (Mich., 1919) 204 Mich.459, 170 N.W. 668
Bandera Master Funds LP v. Boardwalk Pipeline Partners, LP (C.A. No. 2018-0372-JTL) (Del.
Ch., October 7, 2019)

D Kershaw, E-P Schuster, ‘The Purposive Transformation of Corporate Law’, American

Journal of Comparative Law (forthcoming) (available )
E Rock, ‘For Whom Is the Corporation Managed in 2020? The Debate over Corporate
Purpose’ (2021) 76 Business Lawyer 363

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DT Mitchell, From Dodge to eBay: The Elusive Corporate Purpose, 13 Va. L. & Bus. Rev. 155
(2019)

(5) Benefit corporations & community interest companies

*Shackelford, Scott J. and Hiller, Janine S. and Ma, Xiao, ‘Unpacking the Rise of Benefit
Corporations: A Transatlantic Comparative Case Study’ (2020) 60 Virginia Journal of
International Law 697
D Brakman Reiser, Benefit Corporations - A Sustainable Form of Organization (2011), 46
Wake Forest L. Rev. 591–625

(6)Workplace misconduct
D Hemel, D Lund, ‘Sexual Harassment and Corporate Law’, 118 Columbia Law Rev 1583
(2018)
Cleary Gottlieb alert memorandum, Shareholder Complaints Seek To Hold Directors Liable
For Lack of Diversity, July 24 2020

(7) Customers and suppliers as stakeholders

KJ Wheeler and others, ‘Statement on the purpose of a corporation’ Business Roundtable
(19 August 2019)
CK Prahalad and A Hammond, ‘Serving the world’s poor, profitably’ (2002) Harvard
Business Review 80(9) 48

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 Questions for Seminar 3:
Corporate purpose, shareholders and stakeholders

1. What is ‘shareholder primacy’? What are the factors likely to promote shareholder
primacy? Has it been equally present in our core jurisdictions?

2. What are the legal and economic arguments in favour of ‘stakeholder value’? What are
the legal and economic implications for directors and executives?

3. Name the strategy at play in each situation (e.g. taking advantage of market power, of
asymmetrical information, etc) and indicate whether legitimate expectations of
stakeholders are violated. What analytical framework(s) is (are) useful in these
assessments?

a. A bank markets complex and risky investments to unsophisticated investors in no

position to bear substantial losses or to independently evaluate the product being
sold to them.

b. A hotel dramatically increases room rates when a blizzard causes the shut-down
of an airport nearby.

c. An employer may unilaterally rescind benefits or accommodations upon which

workers have long relied, without cause. A manufacturer might degrade the
durability of its products without notice, taking advantage of customers’ reliance on
its formerly sound reputation for quality.

d. Marriott is experiencing a difficult time but its survival is not at stake. Marriott
board members have to decide on a spin-off, project Chariot, whereby the company
will be split into two entities, one holding real estate property (rapidly losing value
due to a turbulent market), the other hospitality services. Shareholders will
be entitled to one share in the two new entities for each of their Marriott shares.
The debt represented by bonds will be allocated to the real estate entity. The bonds
are “covenant lite” and do not contain a veto over demergers that would protect
bondholders against such a transaction that will increase default risk: these
covenants were not customary at the time when the bonds were issued, but they
are now.

4. What constraints may undermine the feasibility of the stakeholder value model? What
support can corporate law provide?

5. Can growing profits be a sign that every stakeholder is benefitting from the firm’s
activities? What about a higher share price?

6. What are the functions of “corporate purpose”, understood as the company’s higher- or
mission-purpose? Under what conditions can such corporate purpose have traction and
how do our core jurisdictions compare from this perspective?

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7. What are the advantages and drawbacks of making it a duty for directors to look after the
interest of the workforce?

8. What is the potential role of corporate law in relation to corporate commitments to

‘fostering diversity among employees’ or a ‘sexual harassment free culture’? Are there
downsides to the potential role of corporate law in this context?

9. How can companies be held accountable to public pledges to lead for the benefit of all
stakeholders, including customers and suppliers?

Seminar 4:
Internal governance at companies with dispersed ownership

In this topic we look into how corporate governance works within companies where no
individual shareholder holding enough shares to control the company): we first identify who
the shareholders are in such companies; next, we look at the implications of such
shareholder base for the dynamics of agency problems within the firm. Then, we look at
some of the core tools to deal with such problems: appointment and decision rights,
independent directors, executive compensation and directors’ liability. Finally, we briefly
look into the conflicts between shareholders and creditors when ownership is dispersed and
corporate governance is strongly shareholder-oriented.

(1) Introductory
*OECD, Owners of the World’s Listed Companies, Parts I, II and 3.1, 3.2, and 3.3.
*J Armour, L Enriques and others, Anatomy, Ch 3.
Z Goshen and R Squire, ‘Principal Costs: A New Theory for Corporate Law and Governance’
(2017) 117 Columbia Law Review 767, 821-829.

(2) Institutional shareholders and voting

*EB Rock, ‘Institutional Investors in Corporate Governance’, in Oxford Handbook of
Corporate Law and Governance (Gordon & Ringe, eds, 2018).
DS Lund, 'The Case against Passive Shareholder Voting' (2018) 43 J Corp L 493

(3) The role of boards, independent directors, and board diversity

RB Adams, BE Hermalin and MS Weisbach, ‘The Role of Boards of Directors in Corporate
Governance: A Conceptual Framework and Survey’ (2010) 48 Journal of Economic Literature
58.
*P Davies and KJ Hopt, ‘Boards in Europe—Accountability and Convergence’, ECGI Law
Working Paper 205/2013.
J Gordon, ‘The Rise of Independent directors in the United States, 1950-2005: Of
Shareholder Value and Stock Market Prices’ (2007) 59 Stanford L Rev 1465 (Parts I, II, III and
IV.A).
DW Puchniak and KS Kim, ‘Varieties of Independent Directors in Asia: A Taxonomy’ in DW
Puchniak, H Baum and L Nottage eds., ‘Independent Directors in Asia: A Historical,
Contextual, and Comparative Approach”, (Cambridge University Press, 2017).
* A Knyazeva, D Knyazeva and L Naveen, ‘Diversity on Corporate Boards’ (2021) 13 Annual
Review of Financial Economics.

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RB Adams, ‘Women on boards: The superheroes of tomorrow?’, (2016) 27 The Leadership
Quarterly, 371

(4) Executive compensation

*G Ferrarini and MC Ungureanu, ‘Executive Remuneration. A Comparative Overview’, in

Oxford Handbook of Corporate Law and Governance (Gordon and Ringe eds, 2018), parts
I, II, III and IV.1.
KJ Murphy, ‘Executive Compensation: Where We Are, and How We Got There’, in
Handbook of the Economics of Finance (Constantinides, Harris and Stulz eds, 2013), 211-
356.

(5) Director liability

* H Spamann, ‘Monetary Liability for Breach of the Duty of Care?’ (2016) 8 Journal of Legal
Analysis, 337.
*C Gerner-Beuerle and E-P Schuster, ‘The Evolving Structure of Director Duties in Europe’
(2014) 15 Eur. Bus. Org. L. Rev. 191 (parts 1-4).

(6) Dispersed ownership governance and other stakeholders: the case of creditors
*E Rock, ‘Adapting to the New Shareholder-Centric Reality’ (2013) 107 University of
Pennsylvania Law Review 1907.

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 Questions for Seminar 4:
Internal governance at companies with dispersed ownership

A. General

1. Which theory, among those covered in lectures 1 and 2 better explains why dispersed
ownership structures prevail in the US and the UK?

2. What are the main advantages and drawbacks of having dispersed ownership?

3. Passive investment funds, which replicate stock market indexes and hold shares
indefinitely, already own approximately more than one fifth of the US stock market and
are growing fast both in the US and in other jurisdictions. What are the implications of
having a large presence of shareholders of this kind for corporate governance and
corporate law?

4. What is the role of the board(s) of a company with dispersed ownership? Are the
board’s functions all synergic? Are there conflicts/negative synergies?

5. What tasks are independent directors expected or required to perform? What impact,
if any, do independent directors have on corporate performance?

6. How, if at all, might the way in which independent directors are deployed be improved?

7. What are the advantages and drawbacks of board diversity? Should jurisdictions
mandate gender quotas in boards?

8. Is executive compensation a manifestation of agency problems within dispersed

ownership companies or a solution thereto?

9. What are the chances for directors of being held liable for duty of care violations in
Europe and the US? Does it matter?

10. What are the agency problems between shareholders and creditors? Are they more
serious in widely held companies than in controlled ones?

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 Seminar 5:
Internal governance at companies with concentrated ownership

In this topic we look into how corporate governance works within companies where one
shareholder or a coalition of shareholders hold enough shares to control the company): we
first identify who the controlling (and non-controlling) shareholders are in such companies
and how they can reinforce their control via control-enhancing mechanisms. Next, we look
at the implications of concentrated ownership for the dynamics of agency problems within
the firm. We focus on tunnelling and related party transactions and the legal tools to
address them.

(1) Concentrated ownership, private benefits of control and minority shareholder

expropriation
*Armour, Enriques and others, The Anatomy of Corporate Law, Ch 4 (section 1 only)
*SY Kang, ‘Generous Thieves: The Puzzle of Controlling Shareholder Arrangements in Bad-
Law Jurisdictions’ (2015) 21 Stanford Journal of Law, Business & Finance 57.
BV Reddy, The Fat Controller: Slimming Down the Excesses of Controlling Shareholders in
UK Listed Companies (2018) 38 Oxford J Legal Studies 733.
LA Bebchuk and A Hamdani, ‘The Elusive Quest for Global Governance Standards’ (2009)
157 University of Pennsylvania Law Review 1263
RJ Gilson, ‘Controlling Shareholders and Corporate Governance: Complicating the
Comparative Taxonomy’, (2006) 119 Harvard Law Review 1641.
Mariana Pargendler, ‘Controlling Shareholders in the Twenty-First Century: Complicating
Corporate Governance Beyond Agency Costs’, (2020) 45 Journal of Corporation Law 953.

(2) Deviations from one-share-one-vote

*A Anand, Governance Issues in Dual Class Share Firms (2018) Working Paper, SSRN, parts
1-3.
LA Bebchuk and K Kastiel, 'The Perils of Small-Minority Controllers' (2019) 107 Geo LJ 1453
M Becht, Y Kamisarenka and A Pajuste, ‘Loyalty Shares with Tenure Voting - A Coasian
Bargain? Evidence from the Loi Florange Experiment’ (2018) ECGI Law Working Paper No.
398/2018.

(3) Related party transactions

*L Enriques and T Tröger, ‘The Law and (Some) Finance of Related Party Transactions’, in L
Enriques and T Tröger (eds), The Law and Finance of Related Party Transactions (CUP:
2019)
KJ Hopt, ‘Groups of Companies’, in Oxford Handbook of Corporate Law and Governance
(Gordon & Ringe, eds, 2018) (sections 1, 2 and 5 only)
DW Puchniak and U Varottil, Related Party Transactions in Commonwealth Asia:
Complexity Revealed, in L Enriques and T Tröger (eds), The Law and Finance of Related
Party Transactions (CUP: 2019).

(4) Concentrated ownership and other constituencies: employees and their

representation on boards
*Armour, Enriques and others, Anatomy, Ch. 4, section 2.
M Gelter, ‘The Dark Side of Shareholder Influence: Managerial Autonomy and Stakeholder
Orientation in Comparative Corporate Governance’, (2009) 50 Harv ILJ 129.
Aktiengesetz §§ 95, 96, 101, 103-104
MitbestG §§ 7, 27, 29

17
Re Worker Participation [1979] ECC 324 (Bundesverfassungsgericht)
*P Davies, ‘Efficiency Arguments for the Collective Representation of Workers: A Sketch’ in
A Bogg, C Costello, A Davies and J Prassl (eds), The Autonomy of Labour Law, Ch. 15 (Oxford:
Hart Publishing, 2015).
K Pistor, ’Co-determination in Germany: A Socio-Political Model with Governance
Externalities’, in Blair and Roe (eds), Employees and Corporate Governance (1999), 163.

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 Questions for Seminar 5:
Internal governance at companies with concentrated ownership

A. General

1. Who owns listed corporations in continental Europe and emerging markets countries?
Who controls them?

2. Which theory, among those covered in lectures 1 and 2, better explains why
concentrated ownership structures prevail in most countries?

3. What are the main advantages and drawbacks of having a controlling shareholder?

4. ‘As policymakers consider granting [differential voting rights] with the intention of
promoting long-term investing, we believe it is necessary to reiterate our support for
the ‘one share, one vote’ proportionality principle. … It is a fundamental principle of
corporate governance that to reduce the princip[al]-agent problem of potentially
divergent or conflicting interests, shareholders must monitor companies. As regulators
call on investors to further engage with issuers in a deeper and more responsible way,
we believe they equally should protect the rights of shareholders, particularly those of
minority shareholders, by promoting the proportionality principle’ (BLACKROCK
INVESTMENT STEWARDSHIP COMMENTARY, 2018).

Discuss.

5. Consider the following methods of minimising the costs associated with related party
transactions:

(a) Prohibition
(b) Review by independent directors
(c) Independent shareholder vote

For each of them:

a. what are the institutional and market factors that might make them more or less
suitable/effective?
b. And relatedly, what are the advantages and disadvantages of each?

6. Are intragroup transactions a special case of RPTs? Do they deserve a more lenient
treatment than other RPTs, as for example in Germany? Why? How do you explain
jurisdictional differences in this regard?

7. Are workers at a higher risk of exploitation and more deserving of legal protection with
or without a controlling shareholder?

8. What are the advantages and drawbacks of involving employees in governance via
representation on the company’s board(s)?

9. Is codetermination in Germany the result of market-driven evolutionary forces? Political

forces? Legal origin? Something else? Do you think codetermination would survive if it
were optional?

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 Seminar 6:
Corporate governance and externalities
Business Roundtable, Statement on the Purpose of a Corporation, August 2019

A. Regulatory Incompleteness and Weak Compliance

A Van Zee, ‘The Promotion and Marketing of OxyContin: Commercial Triumph, Public
Health Tragedy’ 2009 American Journal of Public Health 221
*R Shapira and L Zingales, ‘Is Pollution Value-Maximizing? The DuPont Case’ NBER
Working Paper No 23866
J Armour, ‘Volkswagen’s Emissions Scandal: Lessons for Corporate Governance?’ Oxford
Business Law Blog May 2016, Part 1 and Part 2.
*J Armour, JN Gordon and G Min, ‘Short-Changing Compliance’, 37 Yale J Regulation 1
(2020).

CA 2006 s 174; Insolvency Act 1986 s 214

*Re Barings plc (No. 5) [2000] 1 BCLC 523
UK Corporate Governance Code 2018, Principle O, Provisions 27-31.
DGCL §§ 102(b)(7)
*Re Caremark, Inc, Derivative Litigation 698 A 2d 959 at 966-970 (Del. 1996)
*City of Birmingham Retirement and Relief System v. Good (Del. 2017)
*Marchand v. Barnhill (Del. 2019)
Aktiengesetz §§ 93, 116
A Staker and A Garton, Directors’ Liability and Climate Risk: UK Country Paper (2018)

B. Evolving Shareholder Preferences?

O Hart and L Zingales, ‘Companies Should Maximize Shareholder Welfare not Market
Value’ (2017) 2 Journal of Law Finance and Accounting 247
M Barzuza, Q Curtis and D Webber, ‘Shareholder Value(s): Index Fund Activism and the
New Millennial Corporate Governance’, 93 So Cal L Rev 1243 (2020)
*M Condon, ‘Externalities and the Common Owner’, 95 Washington L Rev 1 (2020)
Stewardship Code 2020 ; Climate Action 100+ FAQ
*J Coffee, The Coming Shift in Shareholder Activism, working paper (2021)

CA 2006 s 414CZA
TCFD, Task Force on Climate-Related Financial Disclosures: Status Report (2019)
Directive 2014/95/EU (Non-Financial Reporting)
EC Communication: Guidelines on non-financial reporting (2017/C 215/01) esp. 4.6(a).
EC Communication: Guidelines on non-financial reporting: Supplement on reporting
climate-related information (2019/C 209/01)
J Coffee, The Future of Disclosure, ECGI Law Working Paper 541/2020 (2021)
J Armour, L Enriques and T Wetzer, ‘Mandatory Corporate Climate Disclosures’, Working
Paper (2021) (will be made available on Canvas).

C. Corporate Commitment
J. Armour, L Enriques and T Wetzer, ‘Making Corporate Carbon Commitments Credible’,
working paper (2021) (will be made available on Canvas).

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 Questions for Seminar 6:
Corporate Governance and Externalities

1. “[I]t is sometimes said that the appropriate role of corporate law is simply to assure
that the corporation serves the best interests of its shareholders or, more specifically, to
maximize financial returns to shareholders or, more specifically still, to maximize the
current market price of corporate shares.” (The Anatomy of Corporate Law, Ch .1)

What is the reasoning behind such claims?

2. Why might corporate activities that cause harm to society (e.g. pollution) maximize
returns to a company’s shareholders, notwithstanding potential regulatory or tortious
liabilities?

3. Do directors’ duties require the creation of externalities, if this is likely to maximize

profits?

4. If corporate activities tend to create externalities, is the solution not simply to impose
more, or more effective, regulation? Is this not then a job for the relevant bodies of
regulation, and not for corporate law?

5. What makes a corporate compliance programme successful? Why might corporate

managers be tempted to under-invest in compliance? Should directors’ duty of oversight
be enhanced?

6. Which shareholders, if any, have incentives to take action to reduce systemic

externalities such as carbon emissions? What are the challenges to, and opportunities for,
shareholder action of this type?

7. Might more ‘decision-relevant’ disclosures about externality-creating corporate

activities be expected to impact a disclosing firm’s stock price? How should such disclosure
be effected?

8. How credible are corporate carbon pledges? How can they be made more credible?

21
 Seminar 7:
Corporate governance, globalization, and nationalism

In a globalized world, one jurisdiction’s companies regularly interact with companies from
other jurisdictions; investors hold shares in companies in a number of jurisdictions. And
corporations themselves may be organised across several jurisdictions and. Recent political
trends have reverted the path to ever closer integration of world economies in the wake of
electoral victories by populist candidates and parties. What is the impact on corporate
governance of opening-up versus closing an economy to trade, foreign investment and
foreign legal institutions? This session analyses the two trends: first, the impact of increased
globalization and inter-jurisdictional cooperation (focusing on regulatory arbitrage,
regulatory competition, and bottom-up legal convergence and top-down harmonization)
and, second, the effects of populism and protectionism on corporate governance and
corporate law.

(1) Introduction
*Hansmann and Kraakman, ‘The End of History for Corporate Law’ (2001) 89 Georgetown
LJ 439 (section III.B.3 only)
W Cary, ‘Federalism and Corporate Law: Reflections Upon Delaware’ (1974) 83 Yale LJ 663
RK Winter, ‘State Law, Shareholder Protection and the Theory of the Corporation’ (1977) 6
J of Legal Studies 251, 289-292
LA Bebchuk and A Hamdani, ‘Federal Corporate Law: Lessons from History’ (2006) 106
Columbia Law Review 1793

(2) Regulatory arbitrage and competition

Marcel Kahan, The State of State Competition for Incorporations, in Oxford Handbook of
Corporate Law and Governance (Gordon & Ringe, eds, 2018).
L Enriques, ‘EC Company Law Directives and Regulations: How Trivial Are They?’ (2006) 27
Univ of Pennsylvania J of International Economic Law 1, Parts 1, 2 and 4.
J Armour and WG Ringe, ‘European Company Law 1999-2010: Renaissance and Crisis’ (2011)
48 Common Market Law Review 125, 149-169.
*Case C-212/97 Centros Ltd v Erhvervs- og Selskabsstyrelsen [1999] ECR I-1459
*Case C-106/16 Polbud — Wykonawstwo sp. z o.o. ECLI:EU:C:2017:804
WG Ringe, ‘Corporate Mobility in the European Union – A Flash in the Pan? An Empirical
Study on the Success of Lawmaking and Regulatory Competition’, (2013) 10 European
Company and Financial Law Review 230-263
Carsten-Beuerle et al., Study on the Law Applicable to Companies (2016)
*Martin Gelter, ‘Centros and Defensive Regulatory Competition: Some Thoughts and a
Glimpse at the Data’, (2019) 20 European Business Organization Law Review 467
Karsten E. Sorensen, ‘Free movement of companies under the new Trade and Cooperation
Agreement between the EU and the UK’, NTS 2021 (available on Canvas)
*UK-EU Trade and Cooperation Agreement, Articles 124-130

(3) Populism, nationalism and protectionism

*CJ Milhaupt, ‘Property Rights in Firms’ (1998) 84 Virginia Law Review 1145.
*M Pargendler, ‘The grip of nationalism on corporate law’ (2020) 95 Indiana Law Journal
533 (you may want to skim through pages 541-574).
Armour et al, ‘Putting technology to good use for society: the role of corporate, competition
and tax law’, 2018 (6) Journal of the British Academy 285, sections 4, 4.1, 4.2 and 4.4.

22
M Frattaroli, ‘Does protectionist anti-takeover legislation lead to managerial
entrenchment?’(2020) 136 Journal of Financial Economics 106.

Questions for Seminar 7:

Corporate governance, globalization, populism and nationalism

1. What are the virtues of ‘federal’ or ‘harmonised’ law? To what extent are such elements
of corporate law present in the US and in the EU? Are they functional?

2. What is ‘regulatory competition’? Is it distinguishable from ‘forum shopping’? What are

the preconditions for its taking place?

3. Is regulatory competition in corporate law desirable? If your answer includes the words
“it depends”, please specify the preconditions for desirability.

4. To what extent do your answers to the previous question create possibilities that
Member States might benefit from a ‘market for incorporations’ in the EU? Is there any
evidence that Member States have responded to this by seeking to make their
corporate law more attractive to firms? What constraints, if any, exist on the extent to
which Member States can do this?

5. What incentives do (Member) States have to compete on the market for corporate
incorporations?

6. What is (and will be) the impact of Brexit on the possibilities of corporate arbitrage in
Europe?

7. What impact is the tide of populism, nationalism and protectionism having, and can be
expected to have if there is no reversal, on:
a. the ownership structure of listed companies?
b. the internal governance of listed companies?
c. other stakeholders’ interests?
d. corporate law?

23
 Seminar 8. Corporate Governance and Innovation

Corporate law can be more or less conducive to various forms of financing for (high-growth)
firms. This seminar will reflect upon the relationship between corporate law and corporate
governance, on the one hand, and innovation and technology, on the other.

(1) Venture capital and corporate law

*SN Kaplan and P Strömberg, ‘Financial Contracting Theory Meets the Real World: An
Empirical Analysis of Venture Capital Contracts’ (2003) 70 Rev Fin Stud 281
JM Fried and M Ganor, ‘Agency costs of venture capitalist control in startups’ (2006) 81
NYU L Rev 967.
In re Trados (Del.Ch., 2013)

(2) Stock Markets, Short-termism, and Innovation

John Armour et al, ‘Putting Technology to Good Use for Society: The Role of Corporate,
Competition and Tax Law’ (2018) 6(s1) Journal of the British Academy 285, pp. 288-292
John C. Coffee, Jr. and Darius Palia, ‘The Wolf at the Door: The Impact of Hedge Fund
Activism on Corporate Governance’ (2015) 41 Journal of Corporation Law 545, pp. 573-591
Mark Roe, ‘Stock Market Short-Termism’s Impact’ (2018) 167 U Penn Law Rev 71
Michal Barzuza and Eric Talley, ‘Long-Term Bias’ (2019) ECGI Working Paper #449/2019

(3) Technology and Corporate Governance

C Van der Elst and A Lafarre, ‘Bringing the AGM to the 21st Century: Blockchain and Smart
Contracting Tech for Shareholder Involvement’ (2017). European Corporate Governance
Institute (ECGI) - Law Working Paper No. 358/2017.
*L Enriques & D Zetzsche, ‘Corporate Technologies and the Tech Nirvana Fallacy’ (2019).
European Corporate Governance Institute (ECGI) - Law Working Paper No. 457/2019.
M Petrin, ‘Corporate Management in the Age of AI’ (2019) Columbia Business Law Journal
965 .
*J Armour and H Eidenmüller, ‘Self-Driving Corporations?’ (2020) Harvard Business Law
Review 87
G Wagner, ‘Robot Inc. – Personhood for Autonomous Systems?’ (2019) 88 Fordham Law
Review 591

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 Questions for Seminar 8:
Corporate Governance and Innovation

1. What are the specific challenges of obtaining finance for highly innovative firms? How
can (corporate) law make it easier? Which, if any, of our core jurisdictions is better suited
to do so?

2. What are the conflicts of interest between founders-entrepreneurs and VC financiers?

What contractual arrangements do parties put in place to minimize the ensuing agency
costs?

3. Why is venture capital more developed in the US than in Germany or even the UK? Does
it matter?

4. What is ‘short-termism’? What are the purported channels through which stock market
short-termism operates? Does the evidence suggest that this is a real, or a perceived,
problem?

5. Will boards’ functions fundamentally change thanks to new technology? Will we need
boards at all once AI-based technological solutions facilitating monitoring become fully
available? If so, how? Should robots be allowed to take board seats?

6. Are algorithmic entities (or self-driving corporations) likely to become a real-world

phenomenon? Should we worry at all? Should there be special rules to address any such
concerns?

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Appendix: General Reading List (for reference)

(a) Theoretical
BR Cheffins, Company Law: Theory, Structure and Operation (OUP 1997)
K Dam, The Law-Growth Nexus (Brookings, Washington DC 2006)
FH Easterbrook and D Fischel, The Economic Structure of Corporate Law (Harvard University
Press, Cambridge, MA, 1991)
JN Gordon and WG Ringe (eds), The Oxford Handbook of Corporate Law and Governance
(OUP 2018)
PA Gourevitch and J Shinn, Political Power and Corporate Control (Princeton University
Press, Princeton, NJ 2005)
P Hall and D Soskice (eds), Varieties of Capitalism (OUP 2001)
H Hansmann, The Ownership of Enterprise (Belknap Press 1996)
KJ Hopt, ‘Comparative Corporate Governance: The State of the Art and International
Regulation’ (2011) 59 American J of Comparative Law 1
C Mayer, Firm Commitment (OUP 2013)
C Mayer, Prosperity (OUP 2018)
AM Pacces, Rethinking Corporate Governance. The Law and Economics of Control Powers
(Routledge, London and New York 2012)
K Pistor, The Code of Capital (Princeton University Press, Princeton, NJ, 2019)
MJ Roe, Political Determinants of Corporate Governance (OUP 2003)
R Romano, The Genius of American Corporate Law (AEI Press, Washington DC, 1993)

(b) Empirical
F Barca and M Becht (eds), The Control of Corporate Europe (OUP 2001)
R Morck (ed), A History of Corporate Governance Around the World (NBER, Chicago, 2005)

(c) Comparative
J Armour and JA McCahery (eds), After Enron: Improving Corporate Law and Modernising
Securities Regulation in Europe and the US (Hart Publishing, Oxford, 2006)
DC Clarke, ‘“Nothing But Wind”? The Past and Future of Comparative Corporate
Governance’ (2011) 59 American J of Comparative Law 75
JN Gordon and MJ Roe, Convergence and Persistence in Corporate Governance (CUP 2004)
KJ Hopt and others (eds), Corporate Governance in Context: Corporations, States, and
Markets in Europe, Japan, and the US (OUP 2005)
RH Huang and M Calcina Howson (eds), Enforcement of Corporate and Securities Law: China
and the World (CUP 2017)
D Kershaw, The Foundations of Anglo-American Corporate Fiduciary Law (CUP 2018)
JA McCahery and others (eds), Corporate Governance Regimes: Convergence and Diversity
(OUP 2002)
CJ Milhaupt, Global Markets, Domestic Institutions: Corporate Law and Governance in a New
Era of Cross-Border Deals (Columbia UP, 2003)
CJ Milhaupt and K Pistor, Law and Capitalism (University of Chicago Press, Chicago 2008)
M Siems, Convergence in Shareholder Law (CUP, Cambridge 2008)

(d) UK
BR Cheffins, Corporate Ownership and Control: British Business Transformed (OUP, 2008)
PL Davies and S Worthington, Gower and Davies’ Principles of Modern Company Law (9th
edn Sweet & Maxwell, London 2012)
PL Davies, Introduction to Company Law (2nd ed, OUP 2010)
D Kershaw, Company Law in Context (2nd ed, OUP: 2012)

26
(e) US
WT Allen, R Kraakman and G Subramanian, Commentaries and Cases on the Law of Business
Organization (4th edn Aspen, New York 2012)
SM Bainbridge, The New Corporate Governance in Theory and Practice (OUP, 2008)
AA Berle and GC Means, The Modern Corporation and Private Property (1932, 1968, 1991)
RC Clark, Corporate Law (Little, Brown, Boston 1986)
WA Klein, JM Ramseyer and SM Bainbridge, Business Associations: Cases and Materials on
Agency, Partnerships, and Corporations (8th edn Foundation Press, New York 2012)
JR Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton UP, 2008)

(f) Germany
JP Krahnen and RH Schmidt (eds), The German Financial System (OUP 2004), available at
http://www.oxfordscholarship.com/
J Franks, C Mayer and H Wagner, ‘The Origins of the German Corporation – Finance,
Ownership and Control’ (2006) 10 Review of Finance 537
W Streeck, Re-Forming Capitalism: Institutional Change in the German Political Economy
(OUP, 2009)
G Wirth and others, Corporate Law in Germany (3rd ed, CH Beck, Munich 2017)

(g) Europe
U Bernitz and WG Ringe (eds), Company Law and Economic Protectionism – New Challenges
to European Integration (OUP, 2010)
V Edwards EC Company Law (OUP 1999)
S Grundmann, European Company Law (2nd edn, Intersentia, Antwerpen 2011)
KJ Hopt and E Wymeersch, European Company and Financial Law: Texts and Leading Cases
(4th ed, OUP 2007)

(h) Emerging Markets

M Trebilcock and M Mota Prado, What Makes Poor Countries Poor? Institutional
Determinants of Development (London, Edward Elgar, 2012)

(i) Particular topics

L Bebchuk and J Fried, Pay Without Performance: The Unfulfilled Promise of Executive
Compensation (Harvard University Press, 2004)
JC Coffee Jr, Gatekeepers: The Professions and Corporate Governance (OUP 2006)
H Eidenmüller and W Schön (eds), The Law and Economics of Creditor Protection: a
Transatlantic Perspective (Asser Press, The Hague 2008)
D Kershaw, Principles of Takeover Regulation (OUP 2016)
M Lutter (ed), Legal Capital in Europe (de Gruyter, Berlin, 2006)
W Njoya, Property in Work (Ashgate, Aldershot, 2007)
A Reisberg, Derivative Actions and Corporate Governance (OUP 2007)

27