Lloyd's Maritime and Commercial Law Quarterly
Taking stock of corporate and securities law in uncertain times
Marc Moore *
The present series of economic and financial crises have strengthened the case for a thoroughgoing re-evaluation of many basic assumptions in international corporate and securities law scholarship. In such troubling times, the lessons learned from past mistakes are often the most valuable tool available for reformists. Against the background of current events, this review article critically assesses the remarkable body of essays collected by Professors John Armour and Joseph McCahery in
After Enron: Improving Corporate Law and Modernising Securities Regulation in Europe and the US (2006). It is suggested that this book offers some potentially valuable insights for academics and policy-makers alike in the search for effective solutions to ongoing problems of corporate accountability and financial market volatility.
The difficulty with compiling a thorough and comprehensive academic response to a corporate catastrophe is that, with the necessary lapse of time involved, any lessons to be gained from the study may come too late in the day to provide a “real time” solution to the underlying problems. Fortunately or, rather, unfortunately
in the case of After Enron: Improving Corporate Law and Modernising Securities Regulation in Europe and the US
,1
its publication preceded another landmark international financial debacle in the form of the current global banking crisis, to which some of this collection’s most salient conceptual analyses and regulatory lessons can now be effectively applied. In any event, as the proactively slanted title of the book suggests, it is as much a positive roadmap for the future as a negative appraisal of what went wrong back in 2001; hence its key insights remain relevant within today’s comparably tumultuous corporate and financial climate. This remarkable body of essays consequently merits close consideration, especially in view of the international calibre of the book’s contributors.
The editors avoid the obvious temptation to commence the book with the “gatekeeper failure” account of Enron which underlies the United States’ Sarbanes-Oxley Act, and opt instead to begin with a fascinating couple of papers on the more fundamental issue of “Stock Markets and Information”. In Chapter 1, Ronald Gilson and Reinier Kraakman revisit a landmark paper from over 20 years ago in which they first challenged some of the key assumptions underlying orthodox finance theory, including the oft-challenged efficient capital markets hypothesis. In contrast, the authors focus on the “real world” institutions
* City Solicitors’ Educational Trust Lecturer, School of Law, University of Bristol.
1. After Enron: Improving Corporate Law and Modernising Securities Regulation in Europe and the US
. Edited by J Armour, Lovells Professor of Law and Finance, University of Oxford, and J A McCahery, Professor of Corporate Governance and Business Innovation, University of Amsterdam, and Professor of Financial Market Regulation, Tilburg University. Hart, Oxford (2007) x and 700 pp, plus 18 pp Index. Paperback £55.
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