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The Financial Determinants of Corporate Governance

THE FINANCIAL DETERMINANTS OF CORPORATE GOVERNANCE, H. Kent Baker, Ronald Anderson, eds., John Wiley & Sons, Inc., 2010

GWU Legal Studies Research Paper No. 477

GWU Law School Public Law Research Paper No. 477

Posted: 12 Sep 2009 Last revised: 11 Oct 2012

Dalia Tsuk Mitchell

George Washington University Law School

Ezra Wasserman Mitchell

Shanghai University of Finance and Economics - School of Law

Abstract

This chapter is a preliminary exploration of the interdependence of finance and the rules of corporate governance. The authors argue that the surviving rules and norms of corporate governance, among many that jurists articulated throughout the twentieth century, were primarily those that reflected the financial realities of their times. Finance drove the reconceptualization of New Jersey corporate law at the turn of the twentieth century, which in turn facilitated the great merger wave that catalyzed the intertwined movements for federal incorporation and antitrust reform. Finance made the 1920s’ and 1930s’ attempts to restrain corporate power ineffective. Finance shaped our understanding of the form and function of the board of directors during the mid-century age of managerialism; and finance led to the broad acceptance of the monitoring board and the norm of shareholder valuism in the last decades of the twentieth century. The current financial crisis illustrates some of the consequences of law’s deference to finance.

Keywords: finance, corporate law, stock, stock markets, shareholders, shareholder proposals, corporate history, shareholder valuism, managerialism

JEL Classification: N22, G38, G30, K21

Suggested Citation

Tsuk Mitchell, Dalia and Wasserman Mitchell, Ezra, The Financial Determinants of Corporate Governance. THE FINANCIAL DETERMINANTS OF CORPORATE GOVERNANCE, H. Kent Baker, Ronald Anderson, eds., John Wiley & Sons, Inc., 2010; GWU Legal Studies Research Paper No. 477; GWU Law School Public Law Research Paper No. 477. Available at SSRN: https://ssrn.com/abstract=1471561

Dalia Tsuk Mitchell

George Washington University Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States

Ezra Wasserman Mitchell (Contact Author)

Shanghai University of Finance and Economics - School of Law ( email )

777 Guoding Road
Shanghai, 200433
China

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