The End of Corporate Governance Law: Optimizing Regulatory Structures for a Race to the Top

47 Pages Posted: 2 Oct 2007  

Steven A. Ramirez

Loyola University of Chicago School of Law

Abstract

The pernicious influence of politics continues to pollute corporate governance applicable to public corporations in the United States. In particular, the political process has yielded a corporate governance regime that simultaneously imposes excessive regulatory costs and impairs investor confidence. CEOs continue to enjoy too much autonomy over the public corporation. Increasingly, empirical evidence shows that corporate governance standards in the U.S. are sub-optimal. This Article proposes to change the legal structure by which corporate governance standards are articulated. Using the Federal Reserve Board as a model, this Article urges the creation of a depoliticized federal agency with authority over an optional federal regime selected by shareholders. As such, corporate governance would be based upon market verdicts and the best corporate governance science rather than institutions (legislatures, courts, and the SEC), which are poorly equipped to impose standards based upon science instead of political caprice.

Keywords: Public Choice, Collective Action, Depoliticizing, Regulation

JEL Classification: G3, K22, F02, G18

Suggested Citation

Ramirez, Steven A., The End of Corporate Governance Law: Optimizing Regulatory Structures for a Race to the Top. Yale Journal on Regulation, Vol. 24, No. 2, 2007. Available at SSRN: https://ssrn.com/abstract=1016921

Steven A. Ramirez (Contact Author)

Loyola University of Chicago School of Law ( email )

25 E. Pearson
Chicago, IL 60611
United States

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