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Economic Efficiency and the Proceduralisation of Company Law

  • Simon Deakin
  • Alan Hughes
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    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.

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    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp133.

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    Date of creation: Jun 1999
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    Handle: RePEc:cbr:cbrwps:wp133
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    1. Aghion, P. & Hermalin, B., 1990. "Legal Restrictions on Private Contracts Can Enhance Efficiency," DELTA Working Papers 90-14, DELTA (Ecole normale supérieure).
    2. 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 103-19, January.
    3. Richardson, G B, 1972. "The Organisation of Industry," Economic Journal, Royal Economic Society, vol. 82(327), pages 883-96, September.
    4. Simon Deakin & Stephen Pratten, 1999. "Competitiveness Policy and Economic Organisation: The Case of the British Film Industry," ESRC Centre for Business Research - Working Papers wp127, ESRC Centre for Business Research.
    5. Easterbrook, Frank H & Fischel, Daniel R, 1993. "Contract and Fiduciary Duty," Journal of Law and Economics, University of Chicago Press, vol. 36(1), pages 425-51, April.
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