Public law and private power: The comparative political economy of corporate governance in the United States and Germany

This dissertation analyzes the political economy of corporate governance reform in the neo-liberal American and the neo-corporatist German corporate governance regimes. These regimes are constituted by a “nexus of institutions” comprised of company law, securities regulation, and labor relations law. Nationally distinctive institutional arrangements constitute the interests and capacities of political and economic actors in pursuing different adaptive and policy reform strategies in response to changing economic conditions. In both the United States and Germany, political actors have facilitated the emergence of new form of “shareholder capitalism” based on increased reliance on securities markets, equity finance, and large institutional investors. This emergent model of capitalism entails more substantial pressures for structural reform and convergence on Germany. However, policymakers in both countries have confronted intense conflicting interests of shareholders, managers, and employees in corporate governance, and these conflicts have shaped the politics and policy of corporate governance reform. The study finds convergence, but also continued divergence between these corporate governance regimes that can only be explained with reference to the countries' different institutional and legal arrangements. Overall, corporate governance reforms reveal consistent trends towards increased legalistic regulation and regulatory centralization that contradict theories of liberalization and deregulation. Securities regulation displays the greatest degree of convergence on the American model of centralized and legalistic transparency regulation. Labor relations law has undergone no convergence, and has actually diverged further with the strengthening of codetermination law in Germany during the late-1990s. By mediating the relationship between securities regulation and labor relations law, the politics of company law reform addressed most directly the conflicting interests of shareholders, managers, and labor. The United States has consistently diminished the interests of non-shareholder constituencies while German company law reforms have preserved the significant role of labor in firm governance. In each country, the political, legal, and practical difficulties of reconciling these conflicts through the adoption of a legal norm of “shareholder primacy” in corporate governance, have led policymakers to favor the adoption of transparency regulation and voluntarist “soft law” approaches to board reform as the most important mechanisms of reform and improvement of managerial accountability.