Two features can be considered to describe the modern world – globalization and the free market. It is widely accepted – almost unquestioningly – that free markets will lead to greater economic growth and that we will all benefit from this economic growth.Güler Aras and David Crowther, ‘Convergence: A Prognosis’ in Güler Aras and David Crowther (eds), Global Perspectives on Corporate Governance and CSR (Farnham, Gower Publishing Ltd, 2009) 314–15
In this chapter we give a brief overview of corporate governance in the US, the UK, New Zealand, Canada, South Africa and India, some of the major Anglo-American corporate governance jurisdictions that are based on the unitary (one-tier) board model. In Chapter 12 we deal with corporate governance developments in the European Union (EU), the OECD principles of corporate governance, and corporate governance in Germany, China, Japan and Indonesia. The OECD principles include traditional Anglo-American corporate governance principles, but go wider – including principles applying to a traditional unitary board structure and principles applying to a typical two-tier board structure.
United States (US)
Background to the corporate governance debate in the US
Corporate governance has been a topic for discussion in the US for a very long time, and the materials written on corporate governance in the US are extensive. As such a dominant world economy, US debates on corporate governance will almost invariably influence corporate governance debates in other jurisdictions. It is, therefore, important to deal with corporate governance debates in the US in order to understand corporate governance models in other parts of the world.
The debate on corporate governance in the US started as early as 1932, when Adolf Berle and Gardiner Means published their book, The Modern Corporation and Private Property. The importance of this debate was emphasised by Myles Mace's book, Directors: Myth and Reality, published in 1971, but the discussion became really heated in 1982 with the publication by the American Law Institute (ALI) of its Principles of Corporate Governance and Structure: Restatement and Recommendations. The project was designed as a restatement of the law, but as corporate law (and hence corporate governance law) in the US is based on state law developments, the exact applications of these broad principles vary from state to state. This project, which had started off quite modestly, resulted in a stream of publications on the topic of corporate governance in the US.