The Corporate Monitor: The New Corporate Czar?

44 Pages Posted: 14 Oct 2007

See all articles by Timothy Dickinson

Timothy Dickinson

Paul, Hastings, Janofsky & Walker, LLP

Vikramaditya S. Khanna

University of Michigan Law School; European Corporate Governance Institute (ECGI)

Abstract

Following the recent spate of corporate scandals, government enforcement authorities have increasingly relied upon corporate monitors to help ensure law compliance and reduce the number of future violations. These monitors also permit enforcement authorities, such as the Securities & Exchange Commission and others, to leverage their enforcement resources in overseeing corporate behavior. However, there are few descriptive or normative analyses of the role and scope of corporate monitors. This paper provides such an analysis. After sketching out the historical development of corporate monitors, the paper examines the most common features of the current set of monitor appointments supplemented by interviews with monitors. This is followed by a normative analysis that examines when it is desirable to appoint monitors and what powers and obligations they should have. Based on this analysis, we provide a number of recommendations for enhancing the potential of corporate monitors to serve a useful deterrent and law enforcement function without being unduly burdensome on corporations. This involves, among other things, discussion of the kinds of powers monitors should have and the fiduciary duties monitors should owe to the shareholders whose businesses they are monitoring.

Keywords: Corporate Monitor, Deferred Prosecution Agreement, Corporate Crime, Corporate Wrongdoing, Sarbanes Oxley, Securities Law, Securities & Exchange Commission, Independent Expert, Fiduciary Duty

JEL Classification: K14, K22, K42

Suggested Citation

Dickinson, Timothy and Khanna, Vikramaditya S., The Corporate Monitor: The New Corporate Czar?. Michigan Law Review, Vol. 105, No. 8, pp. 1713-1756, 2007, Available at SSRN: https://ssrn.com/abstract=1021423

Timothy Dickinson

Paul, Hastings, Janofsky & Walker, LLP ( email )

875 15th Street, N.W.
Washington, DC 20005
United States

Vikramaditya S. Khanna (Contact Author)

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734-615-6959 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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