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6 - Variety and integration: reflexive corporate governance regulation

from PART 2 - Supranational regulatory techniques

Published online by Cambridge University Press:  04 August 2010

Andrew Johnston
Andrew Johnston
Affiliation:
University of Queensland
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Summary

Introduction

The EC's historical approach to corporate governance regulation was discussed at length in the previous two chapters. Community law still has to deal with the various situations where market integration remains restricted by means of harmonisation. Although it now plays a smaller role in market integration, it is still required in precisely those areas in which political agreement is very difficult, because what is at stake – employee participation and productive coalition corporate governance – is viewed as a public good in some Member States.

Reflexive law has offered a way forward, or at least offers an ex post rationalisation of the political compromises which have been reached in this area. Theories of reflexive regulation explain how EC law has been able to further market integration without undermining national regulatory diversity. Its advocates claim that reflexive law is capable of ‘regulating systems of regulation that otherwise would be impossible to regulate’. Its non-prescriptive nature means that no choice has to be made between shareholder and stakeholder models of corporate governance, which in turn allows the political obstacles to agreement on common rules to be avoided. The regulator does not have to choose between traditional full harmonisation of corporate governance and unrestrained regulatory competition. If appropriate procedures can be designed, the efficiency advantages of regulatory competition, in terms of experimentation and (perhaps) regulatory diversity, can be combined with the capacity of regulation to solve market failures, and all this without requiring ex ante instrumental action and unbounded knowledge of the regulatory context on the part of the supranational regulator.

Type
Chapter
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EC Regulation of Corporate Governance , pp. 214 - 244
Publisher: Cambridge University Press
Print publication year: 2009

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