ABSTRACT
Economic success, or the appearance of it, bathes all a nation’s institutions in a rosy glow. In the 1980s it was unfashionable to criticise any feature of the German and Japanese economies, least of all their corporate governance and finance. All the institutions of the US and UK economies were exposed to stringent criticism. Now the glow is on them. The American and (to a lesser extent) British economies are seen as models of dynamism – a dynamism arising from the pervasive effects of unobstructed market forces, including those of the markets for capital and for corporate control. Through them, shareholders rule – ‘outsider’ shareholders without any commitment to the status quo, demanding profit and pushing aside conservative resistance to the innovation needed to produce it. Corporate governance rules which protect such shareholders from misbehaviour by managers or controlling ‘insiders’ help to ensure an abundance of capital to fuel enterprise. Or so we are told.
