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Political Determinants of Corporate GovernancePolitical Context, Corporate Impact$
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Mark J. Roe

Print publication date: 2006

Print ISBN-13: 9780199205301

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780199205301.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 19 October 2021

Its Limits: Theory

Its Limits: Theory

(p.168) Chapter 24 Its Limits: Theory
Political Determinants of Corporate Governance

Mark J. Joe

Oxford University Press

This chapter explores the limits of the theory of corporate law. It holds that the quality-of-corporate-law theory needs to be refined or replaced. Ownership cannot readily separate from control if managerial agency costs are very high for shareholders, and law does not directly affect all managerial agency costs. Elaborate legal doctrine prohibits judicial inquiry into managers' basic business decisions. Other primarily non-legal institutions control the size of managerial agency costs, and these carry in effectiveness from firm-to-firm and nation-to-nation. Thus, corporate law can only be one-half of the central story in the understanding of why ownership does or does not separate.

Keywords:   separation, corporate law's limits, agency costs, private benefits, legal theory

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