More than Meets the Eye: Law and Economics in Modern Company Law
LAW AND ECONOMICS. ESSAYS IN HONOUR OF ERLING EIDE, pp. 217-235, Erik Røsæg, Hans-Bernd Schäfer and Endre Stavang, eds., Cappelen Akademisk, 2010
21 Pages Posted: 13 May 2010 Last revised: 1 Aug 2011
Law and economics, or legal-economics, is the field of science that introduces economic theory into legal theory and enriches them both. The rise of law and economics within company law is significant in at least three ways. Firstly, law and economics may contribute to the structuring of analytical issues and provide valuable insights both through theoretical contributions and empirical studies. Secondly, company law legislation and academic debate are increasingly based on legal-economic theory or at least sought substantiated with reference to legal-economic terms. Thirdly, and accordingly, the legal-economic assumptions that form the basis for legislation and for positions in the academic debate need to assessed.
This article concentrates on the first topic: The use of law and economics to structure a legal analysis. Inspired by the mainstream version of agency theory, the article confronts its overly shareholder-focused perspective and offers an alternative analytical structure.
Keywords: Law and economics, agency theory, company law, securities law, shareholders, board, management, employees, takeovers, takeover directive, sustainable development
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