Fostering Growth Via Regulatory Dualism: Remarks at the European Corporate Governance Conference

Abstract

The European Union may help fostering growth in EU member states struggling with the sovereign debt crisis, inter alia, by reviewing its harmonization directives and regulations so as to cut the redtape they inevitably generate and to encourage a more flexible regulatory environment. In the field of corporate law, to avoid being seen as reducing investor protection in the process, it should introduce stronger rules to tackle insiders' (managers' and dominant shareholders') tunneling. At the same time, to win resistance from well-organized interest groups extracting rents from current rules and regulations (or lack thereof, in the form of pecuniary private benefits of control), the EU should adopt a dualistic approach to regulation. A new redtape-light, tough-on-tunnelling regime should be introduced for future (listed) companies, leaving the existing rules and corresponding rents untouched.

Keywords: European Union, corporate law, corporate governance, redtape, regulatory dualism, related party transactions, insider trading, corporate groups

JEL Classification: K22