
Corporate Governance and Countervailing Power
The analysis of corporate governance has been a strikingly one-sided affair. The focus has been almost exclusively on “internal” checks and balances, namely scrutiny of executives by the board of directors and by shareholders. In contrast, mechanisms that can operate as significant “external” checks on managerial discretion have been largely ignored. My recent paper, “Corporate Governance and Countervailing Power,” functions as a corrective to the prevailing trend. The paper focuses on three historically important examples of external constraints on managerial discretion, namely state regulation of corporate activity, competitive pressure from rival firms, and organized labor. A unifying feature … Read more