The Corporate Governance Obsession

Abstract

Corporate governance has become a central concern of our time. For a variety of problems — from corruption and economic development to systemic risk and rising inequality — corporate governance reform has surfaced as a favored policy response. This Article explores the origins and scrutinizes the implications of this extraordinary focus on corporate governance as a solution to a constellation of economic and social ills.

In a context of growing skepticism of the state, the corporate governance movement offers a midway solution between markets and government. It transposes to the corporate context mechanisms typical of government control, such as “checks and balances” and democracy. This compromise solution turns out to be politically palatable: corporate governance appeals to progressives as a path for social and economic change in the face of political resistance to state intervention, while pleasing conservative forces as an acceptable concession to deflect greater governmental intrusion in private affairs. Whether such a persistent turn to corporate governance is worth the candle, however, remains an open question.

Keywords: Corporate Governance, History, Political Economy

JEL Classification: G30, G38, K22, L20