Recent turmoil in the global economy has attracted the attention of both scholars and the general public to corporate governance reform. Such attention might motivate constructive changes in how businesses operate. However, endangering the process of real change might be an overly narrow focus on the crisis of the moment or a parochial response to such a crisis based on oversimplification of the nature of systemic problems underlying the crisis that might differ in various jurisdictions. John W. Cioffi expertly avoids such hazards and contributes greatly to the reform dialogue in Public Law and Private Power: Corporate Governance Reform in the Age of Finance Capitalism. After setting forth the place of politics in informing a “juridical nexus” model of corporate governance, Cioffi proceeds beyond borders to case studies of governance reform in the United States and Germany. His research and analysis importantly extends back to the 1990s, before the recent financial crisis that some characterize as starting around 2007, to show how law and politics drove reforms that continue to evolve today. In a time when financial institutions wield huge influence over reform, even as their images suffer, Cioffi helps the reader to better comprehend reform as, in part, a reflection of political institutions and processes that differ from one nation to another. His contributions are particularly noteworthy within the corporate governance and international economic law literature.
Cioffi departs from the “shareholder primacy” view of corporate governance, which focuses on corporate action leading to shareholder value over other stakeholder interests (17). Other work, such as that on team production theory, usefully has moved beyond focusing almost exclusively on the agency problems of shareholders and managers to describe corporate behavior in the context of a broader range of interests (Reference Blair and StoutBlair & Stout 1999). Cioffi's take is especially interesting in that it adds nuance to the roles of various actors in corporate governance reform, especially those associated with political institutions interacting with various interest groups. As corporate governance literature, such as noteworthy work by Lucian Bebchuk, increasingly focuses on empowering shareholders, it also is important to understand the ramifications of such empowerment (Reference BebchukBebchuk 2005). Cioffi also beneficially explores how proshareholder policies are not a perfect cure for corporate ills and may even, at times, encourage problems of their own (e.g., 206–208). His balanced approach takes a long-term view of corporate governance reforms. He usefully separates reforms focused on issues such as transparency and accessibility of information to those outside the firm from changes to the structure of a firm's governance, which have deeper impact but are also more challenging to adopt. In doing so, he creates an important narrative that encompasses multiple decades and helps to explain the adoption and relative impact of reforms such as those associated with the Sarbanes-Oxley Act through more recent reforms related to compensation and other matters in the United States and Germany.
Cioffi also offers lessons for what, given the nature of the global economy, will be an increasingly important literature on international economic law. His book is truly an excellent work of comparative law that emphasizes not only points of convergence but also differences among nations in corporate governance reform. In studying multiple areas of law related to corporate governance—including company, securities, and labor law—he cautions against overgeneralizations across nations about trends for reform neatly packaged to associate with the rise of neoliberal ideology. He shows how the law and politics of Germany and the United States are unique. For example, Germany traditionally has emphasized the importance of workers and state coordination of markets in its legal structure (e.g., 19, 140–143). The United States has used private litigation as a more dominant strategy to deal with issues related to companies (e.g., 76–80). Cioffi rightly points out that emphases evolve, as indicated, for instance, by more recent limitations on private litigation in the United States (80–81). The literature requires additional, similar analysis of other differences in national economic approaches, and this analysis must include an appreciation of both political and legal dimensions. Events since the publication of Cioffi's book, such as the European Union's debt crisis, reinforce how countries are increasingly affected by each other's policies in the global economy. This naturally gives rise to hope that nations preemptively might agree to coordinate economic policies on corporate governance and other issues in order to prevent future crises. However, no international organization has authority to order universal policies, so voluntary coordination is critical. As a matter of political economy, voluntary coordination seems unlikely to occur unless nations strive to better understand the traditions and political interests that inform each other's current policy approaches on issues like corporate governance. Cioffi's excellent research into reform in Germany and the United States potentially informs such an understanding.
