Corporate Governance Regulation in the European Union – From Harmonization to Marketization

Abstract

In the last couple of years, a broad range of regulatory initiatives with regard to company law and corporate governance has been taken by the Commission. These efforts, we shall argue, mark both a continuation-with respect to some of the issues involved-and a fundamental break-regarding both form and content-with earlier attempts at company law harmonization within the European Community. This transformation of corporate governance regulation at EU-level may be seen as a reflection and at the same time as an important cause of a broader, transnational transformation of corporate governance regulation in the European political economy. This paper argues that the EU has not only increased its attention to corporate governance regulation, but that, in terms of its content, the European approach to regulating the governance of corporations has shifted from a focus on harmonization, aimed at the prevention of regulatory competition, to a focus on promoting the marketization of corporate control, in part making use of market-based regulatory mechanisms. This shift cannot be simply explained either as a result of exogenous globalization pressures or as response to the recent wave of corporate scandals, but has to be interpreted as bound up with a coherent transnational political project constructed from the late 1980s onwards. This project can be understood both more broadly as a neoliberal project aimed at the marketization of the European socioeconomic order in general-that is, promoting the market mechanism as the organizing principle (Polanyi 1957) of this order-and more narrowly, as a project aimed at the marketization of corporate control. As this papers argues, the latter has been increasingly articulated with, and made an integral part of, Europe's strategy for creating a single financial market. The Transformation of Corporate Governance Regulation in the European Union: From Harmonization to Marketization The virtual unification of national company laws in all essential aspects […] is a deliberate act of policy on the part of the Community. In fact, it is a political act necessitated by the desire to accomplish the aims of the Community