Contract Governance within Corporate Governance - A Lesson from the Global Financial Crisis
University of Bremen, Faculty of Law; Institut für Bank- und Kapitalmarktrecht; Munich Center on Governance, Communication, Public Policy and Law
November 4, 2009
FROM EXCHANGE TO COOPERATION IN EUROPEAN CONTRACT LAW, Cafaggi, Grundmann, eds., 2010
The 2009 Nobel prize for economics was awarded to Elinor Ostrom and Oliver Williamson for their work on economic governance. Williamson once defined governance as “an effort to implement the ‘study of good order and workable arrangements’, where good order includes both spontaneous order in the market [...] and intentional order”. Even though corporate governance has been studied quite well over the last decades, the current financial crisis revealed important weaknesses in governance mechanisms. Yet this crisis did not primarily emerge due to specific corporate structures, but rather had its roots in the instability of markets. Hence the study of good order and workable arrangements needs to take markets into account as well: contract governance is an important lesson of the present crisis. By this token, the destruction of financial values might create a legal innovation, posing new challenges not only for regulators and legal academics, but also for management practice. Contract governance provides for an important link between the corporation and its contractual environment. By virtue of this link, contract governance can contribute to avoid future crises and to make the system of market economy more stable in the long run.
Keywords: Contract Governance, Corporate Governance, Financial Crisis, Nexus of contracts
JEL Classification: G38, G34, K12, K22Accepted Paper Series
Date posted: November 6, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 0.375 seconds