The Shaping Force of Corporate Law in the New Economic Order

University of Richmond Law Review, Vol. 31, No. 5, 1997

Posted: 17 Aug 1998

See all articles by Jeffrey N. Gordon

Jeffrey N. Gordon

Columbia Law School; European Corporate Governance Institute (ECGI)

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This article, based on an invited lecture, argues that the current corporate governance regime plays an insufficiently appreciated role as a shaping force in the current U.S. economic framework. The dominant corporate law norms and the particular distribution of shareownership have combined to produce a responsiveness to capital market signals that has made U.S. firms especially strong worldwide competitors. This responsiveness, and the associated economic success, is at risk because of continuing state legislative and judicial changes that increase management's ability to resist a hostile takeover bid. Institutional investor ownership and activism is insufficient; legal rules matter because they set the framework within which institutions (and catalytic forces like control entrepreneurs) can act. The paper traces the emergence of this corporate governance regime in the 1980s and 1990s, explains its importance to the emerging economic order, and focuses specifically on the Virginia antitakeover statutes and cases as a particularly troubling development.

Suggested Citation

Gordon, Jeffrey N., The Shaping Force of Corporate Law in the New Economic Order. University of Richmond Law Review, Vol. 31, No. 5, 1997. Available at SSRN:

Jeffrey N. Gordon (Contact Author)

Columbia Law School ( email )

435 West 116th Street
Ctr. for Law and Economic Studies
New York, NY 10027
United States
212-854-2316 (Phone)
212-854-7946 (Fax)

European Corporate Governance Institute (ECGI)

B-1050 Brussels


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