Competitiveness with Self-Regulation
40 Pages Posted: 7 Dec 1997
Date Written: November 1997
This paper identifies why US, UK and Australian corporations do not allow directors to avoid conflicts of self-interest, and why corporations lack self-regulation. To avoid conflicts of self-interest, a separation of powers is required to create a compound board. Directors cannot fulfil their duty to monitor and evaluate management with information independent of management unless they obtain advice from advisory councils independently appointed by employees, customers and suppliers. Cybernetic laws show why government regulation cannot be effective, and how compound boards can introduce self-regulation with competitive advantages to simplify the law and reduce the size and costs of government.
JEL Classification: G32, K22
Suggested Citation: Suggested Citation