EC Regulation of Corporate Governance

Abstract

Andrew Johnston examines EC regulation of national corporate governance systems through the lenses of economic theory and reflexive governance. By contrasting the normative demands of the neoclassical 'agency' model with those of the productive coalition model, he shows how their incompatibility required political compromise. Reflexive governance theory is then used to explain how progress has been possible. Through detailed analysis of both case law and positive regulation, the author highlights the move from positive to negative integration; the benefits as well as the limits of regulatory competition; and the significant role of reflexive techniques in both preventing market failure and enabling positive integration to proceed. The workable compromise that has emerged between market integration and continued regulatory diversity at national level demonstrates that procedural regulation can steer autonomous social subsystems towards greater responsibility and a better articulation of the public good.

Theoretical Approach between the Soft and Hard Law in the Context of Corporate Governance

“…"The Transparency Directive is a minimum harmonisation measure requiring listed companies to disclose acquisitions and disposals of substantial shareholdings, and prescribing minimum content for management reports" (Johnston A., 2009). According to provisions in the mentioned Directive, Member States must require shareholders to notify companies in case the amount of the voting rights "reaches, exceeds or falls below" (Directive 2004/109/EC) various thresholds (set at the lower level, 5%, by most of the states).…”

“…"By assisting shareholders to gain a better understanding of the way in which resources are developed, enhanced and allocated within companies, this reflexive solution aims to ensure that corporate management have sufficient autonomy to pursue project which have a longer-time horizon, whilst leaving the existing legal mechanisms of accountability to shareholders intact" (Johnston A., 2009). The important note that has to be made is that the use of quantitative disclosure as a part of reflexive regulatory strategy is at an experimental stage and has to be kept under review, whether it works or not, to ensure that the costs of the exercise can be justified.…”

Regulating Corporate Governance in the EU

“…Deakin 2009;Zumbansen 2009). Johnston (2009) develops this focus further in his thorough examination of EU corporate governance regulation. In order to transcend the underlying pluralist underpinnings of perspective, however, it is imperative to show which interests are driving and contesting these developments, who gains and who loses, and how these processes are constituted by, but at the same time also shape broader political developments.…”

Corporate Governance in Crisis? The Politics of EU Corporate Governance Regulation

“…35 Andrew Johnston develops this focus further in his thorough examination of EU corporate governance regulation. 36 To transcend the underlying pluralist underpinnings of many these perspectives, however, it is imperative to show which interests are driving and contesting these developments, who gains and who loses, and how these processes are constituted by, but at the same time also shape, broader developments in the global political economy.…”