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Towards a Constitutional Theory of Corporate Governance

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  • Matthias Benz
  • Bruno S. Frey

Abstract

The idea that there is a uniformly �optimal� governance structure for corporations features prominently in current debates and policy proposals. In this paper, we propose a different, constitutional theory of corporate governance: the criterion for a good corporate governance structure is whether it is freely chosen by the shareholders. We illustrate our approach by comparing the constitutional rights of shareholders under US corporate law and Swiss corporate law. Moreover, we discuss the mandatory provisions that shareholders would likely include in corporate law at a constitutional stage, behind the veil of ignorance.

Suggested Citation

  • Matthias Benz & Bruno S. Frey, 2006. "Towards a Constitutional Theory of Corporate Governance," IEW - Working Papers 304, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:304
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    File URL: http://www.econ.uzh.ch/static/wp_iew/iewwp304.pdf
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    References listed on IDEAS

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    Keywords

    Corporate; Governance; Constitutional; law;

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