ABSTRACT
Until the explosion of the North American corporate scandals at the turn of the century, the trajectory of corporate governance theory pointed to a convergence that was recognised as the “end of history of corporate law” (Hansmann and Kraakman 2001). This trend rested on the perceived supremacy of the business model adopted chiefly in the United Kingdom and the United States, based on shareholder value, on the diffusion of widely held firms and on the over-reliance on market mechanisms for the regulation of corporate governance. Convergence was in particular thought to lead to a normative consensus related to the application of shareholder value. This was due to the belief – especially among financial economists initially – that aligning managerial decision-making to the interest of shareholders would lead to economic efficiency (Hansmann and Kraakman 2001). Emphasis on economic-centric thinking promoted the concept of efficiency ahead of other policy priorities (such as long-term sustainability for instance) and in turn justified the corporate goal of maximising returns for shareholders, through the increase in share price, as the best allocation of resources (Friedman 1970, pp.32, 33). The “end of history” would thus be represented by an increasingly widespread application of the shareholder primacy ideology at global level.
