Empirical Insights into Corporate Contractarian Theory

Attenborough, D.

Abstract

In UK and US company law and corporate governance, a highly influential economic theory views the company, and the rules related thereto, as a nexus of contracts for organising business activity. This so-called contractarian theory of the company depicts fundamental corporate governance arrangements as a form of private ordering, in which rules are spontaneously produced in the absence of formal legal intervention. This paper draws upon broader empirical evidence of real world private ordering to make two essential arguments, which provide much-needed nuance to the idealised view of spontaneous governance found in the contractarian analysis. First, it emphasises the significance of a distinctive and essential correlative and causal connection between hierarchy and the development and nature of private orders. Secondly, it highlights the ways in which the state positively interacts with the purported self-regulatory capability of the market to produce these uneven endogenous rules.

Citation

Attenborough, D. (2017). Empirical Insights into Corporate Contractarian Theory. Legal Studies, 37(2), 191-213. https://doi.org/10.1111/lest.12134

• Journal Article Type: Article
• Acceptance Date: Apr 25, 2016
• Online Publication Date: Dec 18, 2016
• Publication Date: Jun 1, 2017
• Deposit Date: Apr 28, 2016
• Publicly Available Date: Dec 18, 2018
• Journal: Legal Studies
• Print ISSN: 0261-3875
• Electronic ISSN: 1748-121X
• Publisher: Cambridge University Press
• Peer Reviewed: Peer Reviewed
• Volume: 37
• Issue: 2
• Pages: 191-213
• DOI: https://doi.org/10.1111/lest.12134
• Public URL: https://durham-repository.worktribe.com/output/1385932