Corporate Design for Regulability: A Principal-Agent-Supervisor Model

29 Pages Posted: 9 Sep 2005

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: September 2005

Abstract

Corporate actors differ from individuals in one important respect: technically, it may be possible to observe the formation of the corporate will from outside, and to impact on its formation. This feature can be exploited by regulators. One technology is inducing corporate actors to hire an interface actor, representing the regulatory cause at the interior of the firm. Regulators are corporate actors as well. Statutes usually do not fully determine their behaviour. Therefore, firms may induce the regulator to give an interface actor access to the regulatory arena. This interface actor has the task of representing the commercial cause in regulatory decision-making. The paper uses a principal-agent-supervisor model to analyse each of these cases separately, and to demonstrate how the reciprocal nature of the relationship may be exploited.

Keywords: principal-agent-supervisor, corporate actor, corporate governance, regulatory procedure, governance, interface actor

JEL Classification: C72, D23, D73, K22, K23, K32, L51

Suggested Citation

Engel, Christoph, Corporate Design for Regulability: A Principal-Agent-Supervisor Model (September 2005). MPI Collective Goods Preprint No. 2005/15, Available at SSRN: https://ssrn.com/abstract=796705 or http://dx.doi.org/10.2139/ssrn.796705

Christoph Engel (Contact Author)

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Universität Osnabrück - Faculty of Law

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