A Theory of SME Governance Regulation

62 Pages Posted: 25 May 2018

See all articles by Joseph A. McCahery

Joseph A. McCahery

Tilburg University - School of Law; European Banking Center (EBC); Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Marcelo Godke Veiga

FAAP - Fundação Armando Álvares Pentedado; Godke Advogados; CEU Law School; Insper - Instituto de Ensino e Pesquisa

Multiple version iconThere are 2 versions of this paper

Date Written: December 16, 2017

Abstract

Small and medium enterprises (SMEs) are very important to any economy. They are great job creators, helping to reduce poverty and achieve higher levels of development in all economic sectors. However, SMEs are susceptible to inadequate law and regulation, mainly in countries implementing policies that are hostile toward private enterprise. SMEs, the vast majority of which are private companies, must deal with issues not common to public corporations, and, they should be regulated accordingly. Hurdles that are too difficult to overcome will reduce the rate of firms entering the market. Having an adequate regulatory environment, with low hurdles for company formation and maintenance means that appropriate rules should be in place. Such rules should adequately regulate certain other aspects to foster investments, such as fiduciary duties, property rights and contractual relationships. This paper proposes to establish an analytical framework to be used as a background and a foundation for the promulgation of rules regulating SMEs. We will demonstrate that regulations should be issued only in accordance with technical justifications; otherwise, they will not offer proper guidance.

Keywords: SME, governance, rules, standards, company law, fiduciary duties

JEL Classification: K20, K22

Suggested Citation

McCahery, Joseph A. and Godke Veiga, Marcelo, A Theory of SME Governance Regulation (December 16, 2017). TILEC Discussion Paper No. 2018-016. Available at SSRN: https://ssrn.com/abstract=3179493 or http://dx.doi.org/10.2139/ssrn.3179493

Joseph A. McCahery (Contact Author)

Tilburg University - School of Law; European Banking Center (EBC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands
+31-(0)13-466-2306 (Phone)
+31-(0)13-466-2323 (Fax)

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Marcelo Godke Veiga

FAAP - Fundação Armando Álvares Pentedado ( email )

Rua Alagoas, 903
Higienópolis
São Paulo, São Paulo 01242-902
Brazil

HOME PAGE: http://www.faap.br

Godke Advogados ( email )

Rua Gomes de Carvalho 1666
15th floor
Sao Paulo, São Paulo 04547006
Brazil
+551130499040 (Phone)

HOME PAGE: http://www.godke.com.br

CEU Law School ( email )

Rua Martiniano de Carvalho, 573
São Paulo, São Paulo 01321-001
Brazil

HOME PAGE: http://www.ceulaw.org.br

Insper - Instituto de Ensino e Pesquisa ( email )

R Quata 300
Sao Paulo, 04542-030
Brazil

HOME PAGE: http://www.insper.edu.br

Register to save articles to
your library

Register

Paper statistics

Downloads
49
Abstract Views
297
PlumX Metrics