- See, eg WW Bratton, “Enron and the Dark Side of Shareholder Value” (2002) 77 Tulane Law Review, 1275.
- See Public Company Accounting Reform and Investor Protection (Sarbanes-Oxley) Act, Pub L No 107–204 (codified as amended in scattered sections of 15, 18 USC). Title VII of the Act is the Corporate and Criminal Fraud Accountability Act of 2002. § 801, 116 Stat, 800. Title IX is White Collar Crime Penalty Enhancements Act of 2002 Section 901, 116 Stat, 804. Title XI is the Corporate Fraud and Accountability Act of 2002. § 1101, 116 Stat, 807–10.
- President Bush described the Act as Press Release, President George W Bush, Signing Statement of George W Bush (30 July 2002), available at www.whitehouse.gov/news/releases/2002/07/200207030.html (last visited 14 Oct. 2002).
- See LE Ribstein, “Market vs Regulatory Responses to Corporate Fraud: A Critique of the Sarbanes-Oxley Act of 2002”(2002) 28 Journal of Corporation Law, 1.
- See JA Grundfest, “Punctuated Equilibria in the Evolution of United States Securities Regulation”(2002) 8 Stanford Journal of Law, Business and Finance, 1; LE Ribstein, “Bubble Laws” (2003) 40 Houston Law Journal, 77.
- See JC Coffee, Jr, “The Future as History: The Prospects for Global Convergence in Corporate Governance and its Implications” (1999) 93 Northwestern University Law Review, 641.
- The SEC has proposed limited exemptions for foreign firms from the audit committee and attorney disclosure provisions in Sarbanes-Oxley. See infra text at n 61.
- WO Douglas & GE Bates, “The Federal Securities Act of 1933” (1933) 43 Yale Law Journal 171, 171.
- See Bus Roundtable v SEC, 905 F 2d 406 (DC Cir 1990) (holding the SEC exceeded its statutory authority in promulgating a rule banning national security exchanges and associations from listing stock of corporations that restrict per share voting rights of common shareholders); Santa Fe Indus. v Green, 430 US 462 (1977) (holding that Congress, by enacting section 10(b) of the Securities Exchange Act of 1934, did not seek to regulate transactions that constitute no more than internal corporate mismanagement).
- See FH Easterbrook & DR Fischel, The Economic Structure Of Corporate Law (Cambridge, Mass, Harvard University Press, 1991) 287–88.
- See id at 283–86.
- See id at 288–90. Indeed, this is the basis of the bonding theory of cross-listing discussed in infra subpart III(C).
- See id at 290–92.
- See JC Coffee, Jr, “Market Failure And The Economic Case For A Mandatory Disclosure System”(1984) 70 Virginia Law Review, 717.
- See Easterbrook & Fischel, supra, n 10, 290–96.
- See CJ Simon, “The Effect of the 1933 Securities Act on Investor Information and the Performance of New Issues” (1989) 79 American Economic Review, 295; GA Jarrell, “The Economic Effects of Federal Regulation of the Market for New Security Issues” (1981) 24 Journal of Law and Economics, 613; GJ Benston, “The Effectiveness and Effects of the SEC's Accounting Disclosure Requirements”, in HG Manne (ed), Economic Policy And The Regulation Of Corporate Securities (Washington, American Enterprise Institute for Public Policy Research, 1969), 23; GJ Stigler, “Public Regulation of the Securities Markets” (1964) 37 Journal of Business, 117.
- See W Cary, “Federalism and Corporate Law: Reflections upon Delaware” (1974) 83 Yale Law Journal, 663.
- See, eg LA Bebchuk “Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law” (1992) 105 Harvard Law Review, 1435.
- See generally, Coffee, supra, n 6, 683–92 (discussing several “substantive” requirements in the federal securities laws, including tender offer regulation and the Foreign Corrupt Practices Act); RB Thompson & H Sale, “Securities Fraud as Corporate Governance: Reflections Upon Federalism” (2003) 56 Vanderbilt Law Review, 859.
- See Securities and Exchange Act of 1934, ss 13(d) and 14(d)–(e).
- See Securities and Exchange Act, s 13(b)(2).
- See Howard v Everex Corp, 228 F3d 1057, 1061–64 (9th Cir 2000).
- See LE Ribstein, “Federalism and Insider Trading” (1998) 6 Supreme Court Economic Review, 123.
- See 15 USCA. S 7213 (providing for auditing, quality control, and independence standards and rules, including seven-year retention of work papers, peer review of audits, disclosure of auditors’ testing of issuers’ internal controls, monitoring of ethics and independence, consultation within auditing firms, supervision, hiring, acceptance of engagements, and internal inspection); id. S 7214 (providing for inspections of auditing firms annually for firms doing more than 100 audits per year and every three years for other firms, including inspection of selected engagements and the firm's quality control system.); id. S 7215 (providing for investigations, including requiring testimony and documents, suspension and revocation of registrations of firms or their associated persons who do not cooperate, and sanctions for firm and individual violations and for failures to supervise).
- Ibid. S 7218 (requiring as a condition of SEC recognition of accounting standards as “generally accepted” that these standards be promulgated by an organisation funded as set forth in section 109 and a majority of whose members have not been associated with an accounting firm for two years).
- See 1934 Act, Ss 10Ai(i), (j), (k) and (l) (requiring preapproval by the issuer's audit committee of both audit and permitted nonaudit services, client rotation of audit and reviewing partners, detailed reports by audit firms to issuers’ audit committees and prohibiting audit services to an issuer whose chief executive officer or senior accounting officers were employed by the auditing firm and participated in an audit of the issuer during the preceding year).
- Ibid. S 78j–1(m).
- 15 USCA s 7241.
- For an example of a state law monitoring rule, see In re Caremark International Inc. Derivative Litigation, 698 A 2d 959 (Del Ch 1996) (discussing directors’ duty to supervise and institute internal control systems).
- Ibid. S 7243.
- Ibid. S 7245.
- See 17 CFR ss 205.1–205.7.
- 15 USC Section 78m(k).
- Ibid. s 7262.
- Ibid. s 7264.
- Ibid. s 7265. See infra n 60 and at text.
- 18 USC s 1514A.
- For recent data, see JC Coffee, Jr, “Racing Towards The Top?: The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance” (2002), 102 Columbia Law Review, 1757.
- See Special Study Group of the Committee on Federal Regulation of Securities, American Bar Association, Section of Business Law, “Special Study on Market Structure, Listing Standards and Corporate Governance” (2002) 57 Business Lawyer 1487, 1514–15.
- See 17 CFR s 240.3a12–3(b).
- See International Disclosure Standards, Securities Act Release No 7745 (28 Sept 1999); Concept Release: International Accounting Standards, Securities Act Release No 7801 (16 Feb 2000).
- 15 USC s 78j–1(l). See Coffee, supra, n 38 at 1825–26 (noting that the audit committee requirements of the Sarbanes-Oxley Act are “particularly threatening to many European firms”).
- See M Faccio, and LHP Lang, “The Ultimate Ownership of Western European Corporations” (2002), 65 Journal of Financial Economics, 365 (showing data indicating that in 13 Western European countries an average of 37% of corporations do not have a shareholder controlling at least 20% of the vote, with only the UK and Ireland above 40%); R La Porta, F Lopez-de-Silanes, and A Shleifer, “Corporate Ownership around the World” (1999) 54 Journal of Finance, 471 (showing data indicating that 80% of large publicly traded US do not have a shareholder controlling at least 20% of the vote).
- 15 USC s 78j–1(m)(3).
- See infra text at n 61.
- See 17 CFR s 240.10A-3(e)(1)(i).
- Ibid. S 240.10A-3(e)(3).
- Ibid. S 240.10A-3(e)(1)(i).
- Ibid. S 240.10A-3(b)(1)(iv)(D).
- See s 111 I AktG.
- See generally KJ Hopt, “Modern Company and Capital Market Problems: Improving European Corporate Governance after Enron”, ECGI-Law Working Paper No 5/2002, available at http://papers.ssrn.com/paper.taf?abstract_id=356102 (November 2002). See also TJ Andre, Jr, “Cultural Hegemony: The Exportation of Anglo-Saxon Corporate Governance Ideologies to Germany” (1998) 73 Tulane Law Review 69 (discussing the analogous problems of applying an earlier CalPers proposal on director independence to German firms).
- Problems of this sort led to criticism of the audit committee rule in the German press. See Hopt, supra n 43, n 62 (referring to a “heated discussion” on incompatibility of independence requirements with German co-determination). This provoked objections by 24 major German corporations, which wrote the SEC requesting an exemption. See Petition for Rulemaking submitted by the Organization for International Investment, File No. 4–462 (19 Aug. 2002).
- AktG s 119 I Nr. 5; HGB §318 I.
- 17 CFR s 78j–1(m)(3).
- S 87 I 1 AktG (providing for compensation of management by the supervisory board).
- S 113 I 1 AktG.
- A German corporation is usually subject to the Codetermination Act if it employs more than 2000 employees. S I 1 Nr 2 MitbestG. This would include most large German corporations that would be most likely to be subject to US law.
- S 96 I AktG. See G Halbach et al, Labour Law in Germany: An Overview (Bonn, Federal Ministry for Labour and Social Affairs, 5th rev and extended edn, 1994), 458 (noting that “[l]iterature generally assumes that committees that do not have at least one employees’ representative are legally inadmissible”).
- See Hopt, supra n 51 at 16.
- See Sarbanes-Oxley Act, s 407 (requiring board audit committee to have at least one “financial expert”, defined as one having education or experience including an understanding of accounting principles, experience in preparing financial statements, internal accounting controls and conveying an understanding of audit committee functions).
- See 17 CFR s 240.10A-3.
- Ibid. S 240.10A-3(b)(1)(iv)(C).
- Ibid. S 240.10A-3(b)(1)(iv)(D).
- Ibid. S 240.10A-3(c)(2)(i).
- Ibid.
- Securities and Exchange Commission, Proposed Rule: Standards Relating To Listed Company Audit Committees, Release No. 33–8173 at note 86.
- See Andre, supra n 51 at 155–56.
- See D Ball et al, “Directors Face Fire in Wake of Ahold”, Wall Street Journal, 27 February 2003 at A6.
- See supra text at n 30.
- See supra text at n 33.
- See generally, C Kirchner & RW Painter, “Takeover Defenses under Delaware Law, the Proposed Thirteenth EU Directive and the New German Takeover Law: Comparison and Recommendations for Reform” (2002) 50 American Journal of Comparative Law 451.
- See generally, A Berle & G Means, The Modern Corporation And Private Property (New York, Macmillan, 1932).
- See supra n 43.
- See generally Easterbrook & Fischel, supra n 10; HN Butler & LE Ribstein, “Opting Out of the Corporate Contract: A Response to the Anti-Contractarians” (1990) 65 Washington Law Review 1; HG Manne, “The ‘Higher Criticism’ of the Modern Corporation”(1962) 62 Columbia Law Review 399.
- See generally, HG Manne, “Mergers and the Market for Corporate Control” (1965) 73 Journal of Political Economy, 110.
- See R La Porta, F Lopez-de-Silanes, A Shleifer, and RW Vishny (2000) “Investor Protection and Corporate Governance” 58 Journal of Financial Economics, 3.
- See JN Gordon, An International Relations Perspective on the Convergence of Corporate Governance: German Shareholder Capitalism and the European Union, 1990–2000, ECGI—Law Working Paper No. 06/2003 (January 2003), available at http://papers.ssrn.com/paper.taf?abstract_id=374620.
- See generally, RN Coase, “The Nature of the Firm” (1937) 4 Economica, 386 (introducing concept of firm as a nexus of contracts); M Jensen & W Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure” (1976) 3 Journal of Financial Analysis, 305, 311 (stating that “[t]he private corporation or firm is simply one form of legal fiction which serves as a nexus for contracting relationships …”).
- H Demsetz & K Lehn, “The Structure of Corporate Ownership: Causes and Consequences” (1985) 93 Journal of Political Economy, 1155.
- MJ Roe, Strong Managers, Weak Owners: The Political Roots Of American Corporate Finance (Princeton, NJ, Princeton University Press, 1994); MJ Roe, “Chaos and Evolution in Law and Economics” (1996) 109 Harvard Law Review, 641.
- This term was coined in JC Coffee, Jr, “Privatization and Corporate Governance: The Lessons from Securities Market Failure” (1999) 25 Journal of Corporate Law, 1, 1. For a useful and recent summary, see SJ Choi, “Law, Finance, and Path Dependence: Developing Strong Securities Markets” (2002) 80 Texas Law Review, 1657.
- See R La Porta, F Lopez-de-Silanes, A Shleifer, and RW Vishny (LLS&V), “Law and Finance” (1998) 106 Journal of Political Economy, 1113. Along similar lines, growth may be correlated with basic protection of contract and property rights in common law as compared with civil law countries. See PG Mahoney, “The Common Law and Economic Growth: Hayek Might be Right” (2001) 30 Journal of Legal Studies, 503.
- See H Hansmann & R Kraakman, “The End of History for Corporate Law” (2001) 89 Georgetown Law Journal, 439, 442.
- See LLS&V, Legal Determinants of External Finance” (1997) 52 Journal of Finance 1131 (showing that countries with poorer investor protection have smaller and narrower capital markets and fewer widely held firms); IJA Dyck & L Zingales, “Private Benefits of Control: An International Comparison”, NBER Working Paper 8711 (2002), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=297337 (showing that higher private benefits of control, less developed capital markets, more concentrated ownership, and fewer privatisations as public offerings are correlated with stronger statutory protection of minority shareholders as well as non-legal factors including more diffusion of the press, tax compliance, and product market competition).
- See A Dittmar, J Mahrt-Smith, and H Servaes, “Corporate Liquidity”, Working Paper (July, 2002), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=297337 (firms in countries with strong legal protection are less likely to maintain excess cash balances, for reasons other than problems relating to difficulty of raising needed external capital); FA Gul and HQiu, “Legal Protection, Corporate Governance and Information Asymmetry in Emerging Financial Markets”, Working Paper, City University of Hong Kong (2002), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=298169 (greater legal protection is associated with lower levels of information asymmetry, defined as the relative importance of current earnings, and therefore with less serious agency problems in emerging market countries); LLSV, “Investor Protection and Corporate Valuation” (2002) 57 Journal of Finance, 1147 (showing that firms in countries with better investor protection have higher Tobin's Q ratios); LLSV, “Investor Protection and Corporate Governance” (2000) 58 Journal of Financial Economics, 3 (“LLSV 2000”) (showing that firms in common law countries where investor protection is stronger make higher dividend payouts when firm reinvestment opportunities are poor than do firms in countries with weak legal protection); LLSV, “Agency Problems and Dividend Policies Around the World” (2000) 55 Journal of Finance, 1 (survey of 33 countries showing a correlation between minority shareholder protection and high dividend payout).
- See DK Denis & JJ McConnell, “International Corporate Governance” Working Paper, January, 2003, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=320121 (reviewing literature); KV Lins, “Equity Ownership and Firm Value in Emerging Markets” (5 August 2002) forthcoming Journal of Financial and Quantitative Analysis available at http://papers.ssrn.com/sol3/delivery.cfm/SSRN_ID214909_code000302304.pdf?abstractid=214909 (firm values are lower when management group's control rights exceed its cash flow rights and higher with greater nonmanagement control rights blockholdings, and both effects correlate with low shareholder protection, indicating that non-management blockholding can substitute for legal rights); A Durnev & EH Kim, “The Effects of Growth Opportunities and External Financing on Corporate Governance: Theory and Evidence”, Working Paper, University of Michigan (2002) (relations between governance quality scores and Tobin's Q are stronger in countries that are less investor friendly).
- See Hansmann & Kraakman, supra n 83.
- See BR Cheffins, “Does Law Matter? The Separation of Ownership and Control in the United Kingdom” (2001) 30 Journal of Legal Studies, 459 (showing how dispersed ownership arose in the UK without legal changes); JC Coffee, Jr, “The Rise Of Dispersed Ownership: The Roles of Law and the State in the Separation of Ownership and Control” (2001) 111 Yale Law Journal, 1.
- See F Easterbrook, “International Corporate Differences: Markets or Law?” (1997) 9 Journal of Applied Corporate Finance no 4 at 23; LE Ribstein, “Politics, Adaptation and Change” (1998) 8 Australian Journal of Corporate Law, 246; R Romano, “A Cautionary Note On Drawing Lessons From Comparative Corporate Law” (1993) 102 Yale Law Journal, 2021.
- See Coffee, supra no 88; Mahoney, supra n 82.
- See Ribstein, supra n 89; BR Weingast, “The Economic Role of Political Institutions: Market Preserving Federalism and Economic Development” (1995) 11 Journal of Law, Economics and Organization, 1.
- See Hansmann & Kraakman, supra n 83 (discussing broad worldwide convergence on governance practices, board structure, disclosure and takeover rules in Germany, Japan and the US, failure of alternative manager-oriented, labour-oriented, and state-oriented models of corporate law, and interest group and competitive pressures favouring convergence); A Shleifer, and RW Vishny, “A Survey of Corporate Governance” (1997) 52 Journal of Finance, 737; D Wojcik, “Change in the German Model of Corporate Governance: Evidence from Blockholdings 1997–2001”, Working Paper (15 December 2001) available at http://papers.ssrn.com/sol3/delivery.cfm/SSRN_ID294459_code011219500.pdf?abstractid=294459 (level of ownership concentration for German firms fell significantly, cross-holdings started to dissolve, and financial sector institutions declined in importance between 1997 and 2001, although variation among firms persisted).
- K Palepu, T Khanna & J Kogan, “Globalization and Similarities in Corporate Governance: A Cross-Country Analysis” Harvard Negotiation, Organization and Markets Working Paper No 02–31 (August 2002), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=323621.
- The following arguments are discussed in LA Bebchuk & MJ Roe, “A Theory Of Path Dependence In Corporate Ownership And Governance” (1999) 52 Stanford Law Review, 127. See also, MJ Roe, “Corporate Law's Limits” (2002) 31 Journal of Legal Studies, 233.
- See Shleifer & Vishny, supra n 92 (concluding that significant legal protection is necessary to support market-based system).
- See LLSV, supra n 85.
- See BS Black, “The Legal and Industrial Preconditions for Strong Securities Markets” (2001) 48 UCLA Law Review, 781 (concluding that the essential requirements for strong securities markets are laws and institutions that protect the ability of minority shareholders’ to obtain information and develop confidence in company insiders); BS Black, “The Core Institutions that Support Strong Securities Markets” (2000) 55 Business Lawyer, 1565; Coffee, supra n 88; LLSV, supra n 76.
- See LLSV, supra n 82; Mahoney, supra n 82.
- See WW Bratton & JA McCahery, “Incomplete Contracts Theories of the Firm and Comparative Corporate Governance” (2001) 2 Theoretical Inquiries in Law, 745.
- See Roe, supra n 94.
- See AN Licht, “The Mother of All Path Dependencies Toward a Cross-Cultural Theory of Corporate Governance Systems” (2001) 26 Delaware Journal of Corporate Law, 147; AN Licht, C Goldschmidt, & SH Schwartz, “The Foundations of the Rule of Law and Other Norms of Corporate Governance” Working Paper (24 June 2002).
- See Licht, supra n 101 at 196.
- Ibid. at 198.
- See S Knack & P Keefer, “Does Social Capital Have An Economic Payoff? A Cross-Country Investigation” (1997) 112 Quarterly Journal of Economics, 1251; R La Porta et al, “Trust in Large Organizations” (1997) 87 American Economic Review, 333.
- See id (showing that in societies where there is more trust big firms have larger shares of the economy).
- See Bratton & McCahery, supra n 99 at 755.
- See Gordon, supra n 77.
- See Coffee, supra n 6. For data on the increasing importance of cross-listing, see Coffee, supra n 38; WA Reese, Jr and MS Weisbach, “Protection of Minority Shareholder Interests, Cross-Listings in the United States, and Subsequent Equity Offerings” NBER Working Paper 8164, available at www.nber.org/papers/w8164 (March 2001) (noting that 496 firms cross-listed between 1984–93, and three times more, 1435, during the shorter period 1994–1998).
- For discussions of the role of bonding through cross-listing see Coffee, supra n 38; Coffee, supra n 6; Hansmann & Kraakman, supra n 83; LLSV 2000, supra n 85. Functional convergence also can be achieved by firms relocating or reincorporating in jurisdictions with stronger law. See infra text at n 133. The statement that US laws “strongly protect” shareholders is not intended to suggest that US law necessarily is stronger or better than non-US law.
- See Coffee, supra n 38 at 1780–82.
- For summaries of these alternative theories and evidence, see Coffee, supra n 38 at 1779–1800; AN Licht, ‘Cross-Listing And Corporate Governance: Bonding Or Avoiding?” (2003) 4 Chicago Journal of International Law, 141.
- Non-listed firms that are owned primarily by non-US investors and located outside the US are exempt from registration and reporting under the 1934 Act if they furnish disclosure documents filed under their home country law, and classes of such firms’ securities are completely exempt if held by fewer than 300 US residents at the end of the firm's fiscal year. See 17 CFR s 240.12g3-2.
- See, eg Bersch v Drexel Firestone, Inc, 519 F 2d 974 (2d Cir), cert denied, 423 US 1018 (1975).
- See Craig Doidge, G Andrew Karolyi and René M Stulz, “Why Are Foreign Firms Listed In The US Worth More?” NBER Working Paper W8538 (1 October 2001), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=285337.
- See Reese & Weisbach, supra n 108. Reese & Weisbach show that the size of the post-listing sales is not correlated with the selling firm's location in a weak country. This may be because other bonding alternatives are available for larger equity offerings.
- See CA Doidge, “U.S. Cross-Listings and the Private Benefits of Control: Evidence from Dual Class Shares” University of Toronto Working Paper (January, 2003) http://papers.ssrn.com/paper.taf?abstract_id=373740. The effect of the listing, as distinguished from firms’ self-selection, is indicated by the fact such firms did not have lower voting premiums than comparable firms before they cross-listed.
- See sources cited in supra n 108.
- See Doidge et al., supra n 114.
- See Licht, supra n 111.
- See id at 159 (citing evidence that cross-listing enables informed domestic traders to take advantage of less informed liquidity traders in other countries).
- Another study along these lines is JI Siegel, “Can Foreign Firms Bond Themselves Effectively by Renting US Securities Laws?”, AFA 2003 Washington, DC Meetings (5 July 2003), available at http://papers.ssrn.com/paper.taf?abstract_id=308481 (showing that Mexican firms had increased self-dealing following cross-listing in the US).
- See Licht, supra n 111.
- See infra text at n 138.
- See Siegel, supra n 121.
- See Licht, supra n 111 at 161. One problem with this reasoning is that it leaves unclear why foreign firms would increase equity issues outside the US after the cross-listing, as Reese & Weisbach, supra n 108, show. In other words, why would not non-US investors be equally sceptical?
- For a different conclusion, see Michael A Perino, “American Corporate Reform Abroad: Sarbanes-Oxley and the Foreign Private Issuer” (ms. 2003) (arguing that Sarbanes-Oxley will not deter foreign firms from listing in the US because cross-listing firms can bear the additional costs the Act imposes and these firms derive substantial benefits from cross-listing). On the other hand, there is an indication that cross-listing in the US has declined following Sarbanes-Oxley, although the reasons are unclear. See C Karmin, “Foreign Firms Lose the Urge To Sell Stock in US Market”, Wall Street Journal, 24 July 2003 at C1.
- See id; Reese and Weisbach supra n 108.
- See Doidge et al., supra n 114 (showing that, at the end of 1997, foreign companies listed in the US have a Tobin's q ratio that significantly exceeds that of firms from the same country that are not listed in the US even after controlling for firm and country characteristics).
- See id.
- See Siegel, supra n 121.
- The SEC must rely on, and often does not receive, foreign co-operation. See id at n 18. On this point, see AN Licht, “Genie in a Bottle? Assessing Managerial Opportunism in International Securities Transactions” 2000 Columbia Business Law Review, 51.
- See supra text at n 110.
- See Bratton & McCahery, supra n 99.
- See EB Rock, “Coming to America? Venture Capital, Corporate id.entity and US Securities Law” University of Pennsylvania Law School, Institute for Law and Economics, Res. Paper No 02–07 (April 2002), forthcoming in CJ Milhaupt (ed) Global Markets, Domestic Institutions: Corporate Law and Governance In A New Era Of Cross-Border Deals (New York, Columbia University Press, 2003) available at http://ssrn.com/abstractid.=313419. This device is fully effective only if the firm can prevent application of home state law under the “real seat” rule. Rock shows how startup firms exiting the private phase into public markets can adjust the factors that determine the “seat.”
- See supra text at n 108.
- Twenty-four German corporations, including DaimlerChrysler, Bayer, and Deutsche Telekom wrote the SEC to request an exemption from the Act, and Porsche decided not to list on the NYSE. See Mark Landler, Porsche Is Balking at US Auditing Rule, NY Times, 21 Aug. 2002, at W1.
- See supra text at n 61. Similarly, the SEC's rule under s 307 of the Act on lawyers’ duties exempted foreign attorneys not admitted in the United States, and who do not advise clients regarding US law. See supra text at n 32.
- See F Tung, “From Monopolists to Markets?: A Political Economy of Issuer Choice in International Securities Regulation” (2002) 2002 Wisconsin Law Review 1363.
- Id at 1402–3. See also, JA Fanto, “The Absence of Cross-Cultural Communication: SEC Mandatory Disclosure and Foreign Corporate Governance” (1996) 17 Northwestern Journal of International Law and Business, 119 (discussing lower disclosure standards for foreign issuers under Form 20-F); MB Fox, “Regulation FD and Foreign Issuers: Globalization's Strains and Opportunities” (2001) 41 Virginia Journal of International Law, 653 (discussing exemption of foreign firms from Regulation FD).
- This parallels the effect of physical exit in promoting jurisdictional choice within the US federal system. See LE Ribstein, “From Efficiency to Politics in Contractual Choice of Law” (2003) 37 Georgia Law Review, 363.
- See Fox, supra n 138.
- Ibid. 143 See Coffee, supra, n 6 at 694 (characterising this as a “network externalities” argument).
- Ibid. at 694.
- Ibid. at 695.
- Ibid. at 696.
- Ibid. at 697.
- See JC Coates, IV, “Private vs. Political Choice of Securities Regulation: A Political Cost/Benefit Analysis” (2001) 41 Virginia Journal of International Law, 531.
- See SEC Release, supra n 66 at note 82.
- See supra text at n 67.
Journal of Corporate Law Studies
Volume 3, 2003 - Issue 2