Corporate Governance in an Era of Compliance

66 Pages Posted: 20 Apr 2016

See all articles by Sean J. Griffith

Sean J. Griffith

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Date Written: April 18, 2016


Compliance is the new corporate governance. The compliance function is the means by which firms adapt behavior to legal, regulatory, and social norms. Formerly, this might have been conceived as a typical governance matter to be handled at the discretion of the board of directors. Compliance, however, does not fit traditional models of corporate governance. It does not come from the board of directors, state corporate law, or federal securities law. Compliance amounts instead to an internal governance structure imposed upon the firm from the outside, by enforcement agents. This insight has important implications, both practical and theoretical, for corporate law and corporate governance.

This Article pairs a detailed descriptive study of the contemporary compliance function with a normative account of its incompatibility with current conceptions of corporate governance. It argues that compliance alters the political economy of American business, challenges governance efficiency, and makes old theories of the firm new again. Prescriptively, the Article calls for greater transparency and a more limited role for government in designing corporate governance mechanisms.

Keywords: compliance, corporate governance, enforcement, corporate prosecution, fcpa, deferred prosecution, caremark

JEL Classification: K22, K23

Suggested Citation

Griffith, Sean J., Corporate Governance in an Era of Compliance (April 18, 2016). William & Mary Law Review, Vol. 57, No. 6, 2016, Fordham Law Legal Studies Research Paper No. 2766661, Available at SSRN:

Sean J. Griffith (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

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