Book Review: The Comparative Anatomy of Corporate Law
26 Pages Posted: 21 Nov 2004
Date Written: November 2004
The Anatomy of Corporate law (REINIER KRAAKMAN ET AL., THE ANATOMY OF CORPORATE LAW. A COMPARATIVE AND FUNCTIONAL APPROACH (Oxford University Press 2004)) provides the first global and comprehensive comparative and functional analysis of corporate law. The book makes four main claims:
(1) Business corporations are characterized by "an underlying commonality of structures that transcends national boundaries:" they display everywhere five key features (legal personality, limited liability, transferable shares, delegated management with a board structure, and investor ownership).
(2) The problems that corporate law must universally address stem from the web of agency relationships underlying the corporate form (shareholders-managers; majority-minority shareholders; shareholders-other stakeholders, mainly creditors and employees); in addressing them, "the law turns repeatedly to a basic set of legal strategies."
(3) More analytically, corporate laws in major jurisdictions invariably resort to one or more of ten legal strategies to address such agency problems, as shown by the book's illustration of laws relating to basic governance, creditor protection, related-party transactions, significant corporate actions, control transactions, and issuers and investor protection.
(4) Finally, "[major] jurisdictions pick from among the same handful of legal strategies ... when addressing a specific agency issue or regulating a particular transaction," "corporate law ha[ving] converged significantly across [them]."
After describing claims (1) and (2) and putting them in the context of recent studies in the law and economics of corporations, this review concentrates on the claims (3) and (4), first with a criticism of the book's conceptual framework for failing to consider enforcement issues and the interaction between legal strategies and enforcement techniques. This failure reduces the analytical strength of the book's comparative analysis of corporate laws in major jurisdictions. Finally, the review focuses on the strongest and most controversial claim, the fourth one, first analyzing the authors' explanations for the persisting divergences among major jurisdictions and then questioning its very substance.
Keywords: Corporate Law, Comparative Corporate Governance, Convergence, Corporate Law Enforcement, Self-Dealing
JEL Classification: G34, K22, K42
Suggested Citation: Suggested Citation