22 Pages Posted: 30 Nov 2003
The paper undertakes a comparative study of the set of laws affecting corporate governance in the United States and Germany, and an evaluation of their design - if one assumes that their objective were the protection of the interests of minority outside shareholders. The rationale for such an objective is reviewed, in terms of agency cost theory, and then the institutions that serve to bound agency costs are examined and critiqued. In particular, there is discussion of the applicable legal rules in each country, the role of the board of directors, the functioning of the market for corporate control, and (briefly) the use of incentive compensation. The paper concludes with the authors' views on what taking shareholder protection seriously, in each country's legal system, would require.
Keywords: company law (United States, Germany), corporate governance (United States, Germany)
Keywords: Company Law (United States; Germany); Corporate Governance (United States; Germany)
JEL Classification: G3, K22
Suggested Citation: Suggested Citation
Baums, Theodor and Scott, Kenneth E., Taking Shareholder Protection Seriously? Corporate Governance in the United States and Germany. American Journal of Comparative Law, Vol. 53, Winter 2005; ECGI - Law Working Paper No. 17/2003; Stanford Law and Economics Olin Working Paper. Available at SSRN: https://ssrn.com/abstract=473185 or http://dx.doi.org/10.2139/ssrn.473185
By John Coffee