Corporate Governance and Social Welfare in the Common Law World

The newest addition to the spate of recent theories of comparative corporate governance is Corporate Governance in the Common-Law World: The Political Foundations of Shareholder Power, an important new book by Christopher Bruner. Focusing on the U.S., the U.K., Canada and Australia, Bruner argues that the robustness of the country’s social welfare system is the key determinant of the extent to which its corporate governance is shareholder-centered. This explains why corporate governance is so shareholder-oriented in the United Kingdom, which has universal healthcare and generous unemployment benefits, while shareholders’ powers are more attenuated in the United States, with its much weaker social welfare protections. Canada and Australia fall in between but closer to the U.K. After describing Bruner’s theory and evidence in the first part of this Essay, I poke at it from several angles in the three parts that follow. In Part II, I consider whether there is a mechanism that adequately explains the connection between social welfare and shareholder orientation; interestingly, despite the book’s title, Bruner does not suggest that the common law plays any particular role. In Part III, I consider whether shareholders in the United States may have more power than their limited formal rights suggest, and in Part IV I ask whether the United States (rather than the United Kingdom, as is conventionally assumed) may simply be an outlier, due to federalism and other factors and as reflected in the U.S.’s weak social welfare system. I then conclude