An Ethical Theory of Corporate Governance History

75 Pages Posted: 23 Mar 2007

See all articles by Dirk A. Zetzsche

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; European Banking Institute

Date Written: February 2007


The present Anglo-American system of corporate control is said to be a random result of market forces, the strong influence of which resulted from a weak state, and undefined principles in the state's economic policy until the 1930s. In contrast, in Continental Europe, strong states with a tendency to interfere with market forces were established. The events resulting in these two divergent systems must be analysed in order to understand what predominant factors catalyzed the development of the current corporate governance structures. Though values other than religious principles are likely to prevail today, this paper posits that religious foundations provide a sound explanation for the developmental path of corporate governance in Anglo-America and Continental Europe. Further, it assesses the impact of such an ethical theory of corporate governance history on contemporary convergence debate. In particular, it asserts that ethical restraints may explain path dependency, and that such an ethical path dependency is more likely in times of economic decline than in times of economic growth. Finally, it holds that, in homogeneous societies, ethics can in many respects substitute for good law.

Keywords: Corporate Governance, history, Ethics, Religion, corporate control, shareholder, stakeholder, corporate culture, corporate social responsibility, shareholder rights, capital markets, economic history, path dependency

JEL Classification: B20, G32, G34, G38, K22, K33, N30, N20, N10, O51

Suggested Citation

Zetzsche, Dirk Andreas, An Ethical Theory of Corporate Governance History (February 2007). CBC-RPS No. 0026, Available at SSRN: or

Dirk Andreas Zetzsche (Contact Author)

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511


European Banking Institute ( email )


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