Find and summarise (in no more than 1000 words) some of the work that has been done by Katherine Pistor and others on Convergence, Divergence and Path Dependency' of legal systems as it relates to International Corporate Governance.
In recent years the issue of corporate governance has become a keenly debated topic in international finance. In developed countries, some of the biggest corporate collapses in history have brought about a change in focus. No longer are governments and lawmakers trying to deregulate and reduce the controls and disclosure requirements of corporations. The deregulation boom has ended, as regulation comes back into the picture.
After the Latin American Crisis of 1995 and the Asian Currency crisis of 1997-1998, corporate governance is also a key area of concern in developing countries. Questions about the optimal set of rules and regulations that govern corporations are being posed. One of the biggest points of discussion in this debate is how corporate governance and legal systems are developing of their own accord, and in particular relative to one other. There are two schools of thought in relation to this issue: those who believe in convergence and those who believe in divergence. The convergence school says that countries select the laws that have been shown to be the most effective in other countries, because of competition between regulators. On the other hand, the divergence approach says that laws are path dependent, meaning that legal rules are determined by pre-existing structures and laws.
Convergence
In an increasingly globalized world, efficient new technologies and production systems spread rapidly, as competition quickly removes those producers who are slow to react. Those who believe in the convergence argue that "just as the founders of a firm have incentives to make the kind of products that people want to buy, lawmakers have the incentive to make the kind of firm, governance structure and securities that customers want to buy" (Easterbrook & Fischel 1991, pp. 212).
As barriers between countries fall, firms can more easily move to countries with the most attractive corporate governance rules. Inevitably, it is argued, the world will move towards have one set of harmonious legal rules.
Divergence
Why is it then that the legal rules we see throughout the world differ so greatly? This is the question that is asked by the divergence school of thought.
There are many influences on the way our law is formed and it can come
International Conference HHL Leipzig Graduate School of Management, 2012. Key Corporate Governance Issues in Emerging Markets: theory and practical execution. Leipzig, Center for Corporate Governance, HHL Leipzig Graduate School of Management, p. 181.
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
The end of 2001 and the start of 2002 saw the end of a period of magnified share prices and booming businesses. All speculations of misrepresentation came to light and those firms which once seem unconquerable were now filing for bankruptcy. Within this essay, I shall discuss the corporate governance mechanisms and failures which led to the Enron scandal resulting in global corporate governance reforms being encouraged.
Therefore, for the development of the society, a legal, formal and universal system has to be established, that can deal with subjects, that cannot be resolved or addressed through natural, customary or religious law. Thus over time, the law scholars and sociologists started to understand the complexity and interrelationship between law and society.
As far as the Asian countries concern regarding the corporate governance issues, they started to enforce their own Code of Corporate Governance to avoid any financial crisis in the future. Among the countries that established the Code of Corporate Governance after the financial crisis were Malaysia and Singapore, which in the year 2000 and 2001 respectively (OECD, 2014). In contrast, Hong Kong has become the first Asian country that produced the Code of Best Practice, which was officially released in 1993 (ACGA, 2012). By having the Code before 1997 Asian financial crisis, Hong Kong became a top-ranked country with strong corporate governance practice in early 2000s. However, as the development of corporate governance practices were actively took place in Asia, Singapore replaces Hong Kong at the top in 2010 while Malaysia shows good performance in improving its corporate governance practices (Lees, 2010). The improvement of corporate governance among these three countries can be seen by the revision of their ‘Code’. Hong Kong Stock Exchange revised the Corporate Governance Code in 2004, followed by Singapore in 2005 and Malaysia in 2007 (OECD, 2014). In 2012, these three countries faced t...
The Principle of Separate Corporate Personality The principle of separate corporate personality has been firmly established in the common law since the decision in the case of Salomon v Salomon & Co Ltd[1], whereby a corporation has a separate legal personality, rights and obligations totally distinct from those of its shareholders. Legislation and courts nevertheless sometimes "pierce the corporate veil" so as to hold the shareholders personally liable for the liabilities of the corporation. Courts may also "lift the corporate veil", in the conflict of laws in order to determine who actually controls the corporation, and thus to ascertain the corporation's true contacts, and closest and most real connection. Throughout the course of this assignment I will begin by explaining the concept of legal personality and describe the veil of incorporation. I will give examples of when the veil of incorporation can be lifted by the courts and statuary provisions such as s.24 CA 1985 and incorporate the varying views of judges as to when the veil can be lifted.
Nottingham Trent University. (2013). Lecture 1 - An Introduction to Corporate Governance. Available: https://now.ntu.ac.uk/d2l/le/content/248250/viewContent/1053845/View. Last accessed 16th Dec 2013.
Law is the framework which applies to members of the community and sets the binding values and standards recognized by its subjects. It regulates their behaviour and it reflects the principles ...
Every nation has their own set of legal strategies they use to guide them in making important decisions. Each nation has its traditions and policies they follow. Through the world, there are two main types of legal systems that are used; most nations follow either common or civil law. Both the common law system and the civil law system share similarities in having courts, judges, and comparing cases to laws. While both systems share similarities, they also contain many differences, making them two very divergent legal systems.
..., S. A., & MEERA, A. K. (2013). Let's Move to "Universal Corporate Governance Theory".. Journal of Internet Banking & Commerce, 18(2), 1-11.
Corporate law is an area of law that directly relates to dealings with corporations within our legal system. “In Ontario, law compromises of statutes, regulations and cases. This means that to understand the law in any area, you must familiarize yourself with the statute or statutes that relate to that area, check related regulations where required, and read cases that show you how the courts have applied those statutes and regulations in real life situations” (Corporate Law for Ontario Businesses, 2012, pg. 2). In this paper I will be doing just that. I am going to be looking at a particular case that happened and examine how the courts applied legal regulations to a real life situation. I will also be examining what it means for a corporation to be a separate legal entity, as well as the level of importance a shareholder has within a company. All of these topics directly relate to the case I will be examining and are important to knowing in order to understand why the court made the decision that they did. Lastly, I will be discussing my own personal opinions on the case and the decision made by the courts.
There are two types of laws. There are conventional laws and natural laws. Conventional laws are those laws arrived at through consensus between those governed and the government. Natural laws are those laws that are universal and are derived from the natural order of the world. In my opinion, natural law cannot work in our society, as they are not suitable for our environment and how we live together as a society. Natural laws can’t work without causing trouble and chaos between everyone, so why should we place them in our society? On the other hand, conventional laws are governed and are made to be just for the society. That is why we need conventional laws in our society, not natural laws. Also, since conventional laws are governed, they are made sure to be enforced, and breaking them will only ruin that one person for what they have done, not the society as a whole.
Everyone know that Law is a system of rules which are developed in community with a aim to govern a society maintaining, justice, protect individuals and property. There are a lot of countries and they have own set of rules and norms including itself constitutional, criminal, contract, trust, international, tort, administrative and property. During the long time law improving and developing a lot and become more invulnerable and fair. Therefore, in a modern society and most of countries law has become similar with similar legal system. Nowadays there are several general types of legal system in the world and two main most popular of them, which had mostly spread through the world. They
Organization for Economic Co-operation and Development. Improving Business Behavior: Why we need Corporate Governance. Oct. 2004. OECD.