Legal Research On Korean Corporate Governance

There are various forms of business enterprises,but every country has a stocklimited company(“corporation”).Although limited liability companies are widely used in China and Germany,corporations are the most common in the world.One of the reasons lies in the efficiency of the corporate governance in corporations.There are four characteristics of the corporate governance.They are as follows: the legal entity,the limited liability of shareholders,the free transfer of shares,and the board of directors.The specific structure of the corporate governance varies depending on the economic situation of each country.Currently the American model,the German model,and East Asian model(China,South Korea,and Japan)are being used a lot in the corporate governance.There is a view that the corporate governance of the U.S.will be more popular,just as the economy of the U.S is more influential around the world.However,it is difficult to conclude this way,because of its path-dependent aspect of the corporate governance.Since the 1998 Asian financial crisis,the U.S.model has been strongly influenced in Korea.Especially,the research methods of the law and economics of U.S.is wildly used in the study of corporate governance.In the law and economics,corporations are regarded as "nexus of contracts".The law and economics adopts a quantitative analysis method,which makes it easy to understand.But It tends to deny the legal entity of a corporation and see a corporation as a tool for the interests of shareholders.There are two main theories in corporate governance by the methods of law and economics: the theory that emphasizes transaction costs and the theory that emphasizes agency costs.The above theories are common in that they value shareholder interests.This paper examines the structure of corporate governance from Lumann's systematic perspective.Lumann presupposes the difference between the system and the environment and the "complexity gap" between the system and the environment.In order to maintain the system sustainably,it is necessary to effectively reduce the complexity of the environment,which is known as the reduction of complexity.Corporations can build a good structure of corporate governance by efficiently reducing the complexity of the environment.Namely,corporate governance is designed to reduce the complexity of the environment while enhancing efficiency and autonomy of corporations.In Lumann's theory,stakeholders such as shareholders,creditors,and workers of corporations do not belong to the system of corporations,but rather belong to the environment of corporations.This indicates that corporation does not exist for the benefit of stakeholders,especially shareholders.The corporation itself is a self-creative system.But a corporation cannot exist and develop without protecting its stakeholders.The corporation system protects the benefit of stakeholders through "structural coupling"."Structural coupling" means that corporate agencies' control over each other must be minimal.If the control over each other violates its own self-restraint,the agency itself will not function well.Corporate governance therefore should protect and increase the autonomy of agencies of a corporation.Talcott Parsons,who advocated structural functionalism,analyzed the function of the system's internal structure,but failed to analyze the relationship between the system and the environment.And he emphasized the purpose of the system and ignored the autonomy of the agencies in the system.Lumann values the relationship between the system and the environment,and also values the autonomy of the agencies.Therefore,it is necessary to observe concretely the phenomena of the corporate governance in the analysis of the corporate governance.In Lumann's system theory,the environment of corporations is always uncertain and complex,and the system of corporations are created through every moment of operation.Since corporations are self-created systems,there is no ideal structure of corporate governance in all corporations.This paper attempts to apply the Lumann's theory to the corporate governance and introduces the characteristics and phenomena of the governance structure of Korea in detail.During the legislation of corporate governance of Korea,its legislation has tended to be enacted in a way that regulates the conduct of the corporation rather than respecting its autonomy,not for economic reasons but for social and political reasons.I hope that the paper will be able to raise the level of discussion on corporate governance in both China and Korean by correctly establishing the meaning of corporate governance.