Global Corporate Governance: Implications For A Functionally Harmonized Legal Infrastructure

Abstract

As developing and centrally planned economies shift toward decentralized market economies, they will revise their corporate governance rules to attract foreign investors and foster economic growth.  However, the expansion of firms internationally creates the immediate problem of cross-border bankruptcy and policy makers will eventually have to turn to functional harmonization of national bankruptcy laws as well as other means of corporate governance to maintain fairness and to facilitate a freer flow of cross-border investment.   We propose three major changes to global governance:  (1) a functionally harmonized system of bankruptcy laws that supersede national bankruptcy laws  (2) contractual corporate governance via securities exchange listing and (3) arbitration as a means to enforce global recourse.