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Markets for capital, products, and managerial talent are expanding rapidly across national borders, yet domestic laws and practices have never had greater impact on corporate structures and cross-border deals. Investors pursuing high returns and diversification, entrepreneurs seeking capital, and managers endeavoring to restructure troubled enterprises now routinely face transaction counter-parties who operate within different legal and political systems, and who rank social priorities quite differently. This dynamic tension between global markets and domestic institutions fuels the debate on corporate governance reform now raging in virtually every region of the world. It also frames the intellectual agenda of the distinguished contributors to this volume, who examine such issues as the possible convergence of corporate governance practices around the world, national variations in the quality of corporate law, and the fiduciary responsibilities corporate managers around the world owe to their shareholders. Among the book's many insights is the contention that "globalization" and "global markets" are misleading terms, because they mask the local quality of much of the activity occurring within those rubrics. Case studies focus on France, Germany, Italy, Japan, Korea, Taiwan, and the transition economies of Eastern Europe.
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Global Markets, Domestic Institutions
Global Markets, Domestic Institutions Corporate Law and Governance in a New Era of Cross-Border Deals
Edited by Curtis J. Milhaupt
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columbia university press Publishers Since 1893 New York, Chichester, West Sussex Copyright © 2003 Columbia University Press All rights Reserved Library of Congress Cataloging-in-Publication Data Global markets, domestic institutions : corporate law and governance in a new era of cross-border deals / edited by Curtis J. Milhaupt. p. cm. Includes index. ISBN 0–231–12712–X (cl. : alk. paper)—ISBN 0–231–12713–8 (pa. : alk. paper) 1. Corporate governance—Law and legislation. 2. Corporate law. 3. Corporate governance. I. Milhaupt, Curtis J., 1962— K1327.G583 2003 346.0664—dc21
2003046058
Columbia University Press books are printed on permanent and durable acid-free paper Printed in the United States of America A All the citations to information derived from the World Wide Web (URLs) were accurate at the time of writing. Neither the volume editor, the contributors, nor Columbia University Press is responsible for Web sites that have changed or expired since the time of publication. c 10 9 8 7 6 5 4 3 2 1 p 10 9 8 7 6 5 4 3 2 1
For Conrad C.J.M.
Contents
Contributors Preface
ix
xiii
Introduction: The Dynamic Tension in Corporate Governance
1
Curtis J. Milhaupt
Part I 1
Fiduciary Duties and Corporate Governance
15
Controlling Corporate Self-Dealing: Convergence or Path-Dependency? 17 Zohar Goshen
2
On The Export of U.S.- Style Corporate Fiduciary Duties to Other Cultures: Can a Transplant Take? 46 Lynn A. Stout
3
Fiduciary Duty in Transitional Civil Law Jurisdictions: Lessons from the Incomplete Law Theory 77 Katharina Pistor and Chenggang Xu
4
What Corporate Law Cannot Do
107
Mark J. Roe
Part II 5
Convergence and Reform, Europe and Asia
153
Regulation and the Globalization (Americanization) of Executive Pay 155 Brian R. Cheffins and Randall S. Thomas
6
Corporate Governance, Employees, and the Focus on Core Competencies in France and Germany 183 Michel Goyer
viii
7
Contents
Convergence on Shareholder Capitalism: An Internationa