ARTICLE: AN ANALYSIS OF ENABLING VS. MANDATORY CORPORATE GOVERNANCE: STRUCTURES POST-SARBANES-OXLEY Skip over navigation
LexisNexis® Browse Law Reviews and Treatises
Skip over navigation
Sign in with your lexis.com® ID to access the full text of this article.
-OR-
Order the full text of this article if you do not have a lexis.com® ID.
 
Price: 
US $22.00 (+ tax)
 
 

Copyright (c) 2006 Delaware Law School of Widener University, Inc.
Delaware Journal of Corporate Law

ARTICLE: AN ANALYSIS OF ENABLING VS. MANDATORY CORPORATE GOVERNANCE: STRUCTURES POST-SARBANES-OXLEY

2006

31 Del. J. Corp. L. 229

Author

BY ANITA INDIRA ANAND *

Excerpt

I. INTRODUCTION

In the United States, certain aspects of corporate governance have become the subject of mandatory regulation under the Sarbanes-Oxley Act. 1 Other major common law jurisdictions, such as the United Kingdom, Australia, and Canada, have rejected mandatory corporate governance legislation of this nature. These countries have opted for an enabling, or partially enabling, regime under which firms can choose governance practices they will adopt from a list of best practices, but they must disclose their choices and the resulting governance structure of the firm. This article examines whether an enabling structure gives rise to the benefits of a mandatory governance regime, but at less cost.

Proponents of the free market system dismiss the notion of a mandatory corporate governance regime, arguing that if enhanced corporate governance practices were beneficial and desired by investors, firms competing for scarce capital would implement them voluntarily. On the other hand, investor advocates argue that an enabling regime is insufficient, since there is no guarantee that all firms will implement the reforms necessary to provide investors with adequate checks on agency problems. On this view, mandatory corporate governance -- like rules prohibiting insider trading -- is necessary to protect investors.

These extreme positions do not capture the complexities inherent in a choice between enabling and mandatory governance regimes. I argue that firms have incentives to adopt corporate governance practices in the absence of a legal requirement to do so. Furthermore, an enabling governance regime coupled with mandatory disclosure of ...
 
 
If you are interested in obtaining a lexis.com® ID and Password, please contact us at 1-(800)-227-4908 or visit us at http://www.lexisnexis.com/.
Search Documents
 
eg., Environmental Insurance Coverage Under the Comprehensive General Liability Policy
 
 
 
 

Lexis® Web - The only search engine that delivers free web content specifically from legal sites validated by LexisNexis® attorney editors and includes tools for faster research and more relevant results.

 
LexisNexis Store
Research Now - Go to lexis.com
Connect the Dots - Free 1 hour webcast
Share. Network. Discover. - Go to LexisNexis Communities