Towards a Constitutional Theory of Corporate Governance

32 Pages Posted: 28 Sep 2006

See all articles by Matthias Benz

Matthias Benz

University of Zurich - Department of Economics

Bruno S. Frey

CREMA; University of Basel

Date Written: June 2006


The idea that there is a uniformly "optimal" governance structure for corporations features prominently in current debates and policy proposals. In this paper, we propose a different, constitutional theory of corporate governance: the criterion for a good corporate governance structure is whether it is freely chosen by the shareholders. We illustrate our approach by comparing the constitutional rights of shareholders under US corporate law and Swiss corporate law. Moreover, we discuss the mandatory provisions that shareholders would likely include in corporate law at a constitutional stage, behind the veil of ignorance.

Keywords: corporate governance

JEL Classification: G3, K22, M10

Suggested Citation

Benz, Matthias and Frey, Bruno S., Towards a Constitutional Theory of Corporate Governance (June 2006). Available at SSRN: or

Matthias Benz (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006

Bruno S. Frey

CREMA ( email )

Südstrasse 11
Zurich, CH 8008
+41 44 380 00 78 (Phone)

University of Basel ( email )

Peter Merian-Weg 6
Basel, 4002

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