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Objectivity, Control and Adaptability in Corporate Governance

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  • Arnoud W.A. Boot

    (University of Amsterdam)

  • Jonathan R. Macey

    (Cornell University)

Abstract

Countries appear to differ considerably in the basic orientations oftheir corporate governance structures. We postulatethe trade-off between "objectivity" and "proximity" as fundamental tothe corporate governance debate. We stress thevalue of objectivity that comes with distance (e.g. the marketoriented U.S. system), and the value of better informationthat comes with proximity (e.g. the more intrusive ContinentalEuropean model).A superior corporate governance arrangement must balance thebenefits of proximity and objectivity. In this context,we also discuss the ways in which investors have "contracted around"the flaws in their own corporate governancesystems, pointing at the "adaptability" of different arrangements.

Suggested Citation

  • Arnoud W.A. Boot & Jonathan R. Macey, 1998. "Objectivity, Control and Adaptability in Corporate Governance," Tinbergen Institute Discussion Papers 98-064/2, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19980064
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    Cited by:

    1. Boot, Arnoud W. A., 1999. "European lessons on consolidation in banking," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 609-613, February.

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