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Economic Efficiency and the Proceduralisation of Company Law

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  • Simon Deakin
  • Alan Hughes

Abstract

This paper extends the analysis carried out by the authors for the UK Law Commissions and published as Part 3 of the Consultation Paper on Directors, Duties (September 1998). After considering some of the potential uses of economics in company law, the paper develops a theoretical framework which relates company law to a wider set of corporate governance mechanisms which operate to mitigate risk and uncertainty in contractual relations. This framework is then applied to provisions relating to self-dealing and conflicts of interests under Part X of the Companies Act 1985. It is argued that in this and related contexts, the economic role of company law should be seen as promoting cooperation and the sharing of information and risk between corporate actors, a function described in terms of the 'proceduralisation' of company law.

Suggested Citation

  • Simon Deakin & Alan Hughes, 1999. "Economic Efficiency and the Proceduralisation of Company Law," Working Papers wp133, Centre for Business Research, University of Cambridge.
  • Handle: RePEc:cbr:cbrwps:wp133 Note: PRO-2
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    File URL: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp133.pdf
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    References listed on IDEAS

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    1. Simon Deakin & Stephen Pratten, 1999. "Competitiveness Policy and Economic Organisation: The Case of the British Film Industry," Working Papers wp127, Centre for Business Research, University of Cambridge.
    2. Easterbrook, Frank H & Fischel, Daniel R, 1993. "Contract and Fiduciary Duty," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 425-451, April.
    3. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-896, September.
    4. Aghion, Philippe & Hermalin, Benjamin, 1990. "Legal Restrictions on Private Contracts Can Enhance Efficiency," Journal of Law, Economics, and Organization, Oxford University Press, vol. 6(2), pages 381-409, Fall.
    5. Coase, R H, 1996. "Law and Economics and A. W. Brian Simpson," The Journal of Legal Studies, University of Chicago Press, vol. 25(1), pages 103-119, January.
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    Cited by:

    1. Tortia, Ermanno C., 2017. "The firm as a common. The case of the accumulation and use of capital resources in co-operative enterprises," MPRA Paper 76735, University Library of Munich, Germany.
    2. Simon Deakin & Richard Hobbs & David Nash & Giles Slinger, 2002. "Implicit contracts, takeovers and corporate governance: in the shadow of the city code," Working Papers wp254, Centre for Business Research, University of Cambridge.
    3. Duncan McLaren, 2004. "Global Stakeholders: corporate accountability and investor engagement," Corporate Governance: An International Review, Wiley Blackwell, vol. 12(2), pages 191-201, April.
    4. Simon Deakin & Fabio Carvalho, 2009. "System and Evolution in Corporate Governance," Working Papers wp391, Centre for Business Research, University of Cambridge.
    5. John Armour & Michael J Whincop, 2005. "The Proprietary Foundations of Corporate Law," Working Papers wp299, Centre for Business Research, University of Cambridge.
    6. Simon Deakin & Giles Slinger, 1999. "Company Law as an Instrument of Inclusion: Re-regulating Stakeholder Relations in the Context of Takeovers," Working Papers wp145, Centre for Business Research, University of Cambridge.
    7. Simon Deakin & Stephen Pratten, 1999. "Reinventing the Market? Competition and Regulatory Change in Broadcasting," Working Papers wp134, Centre for Business Research, University of Cambridge.

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