Basic Corporate Law

Author: Romano
Publisher:
Publication Date: 2005-03-01
Features: This decade witnessed a corporate law revolution. During this extraordinary period, the industry innovated in business organizational structures and merger behavior patterns, while the theory in the field of corporate law underwent significant changes due to the introduction of analytical methods such as organizational theory from economics and modern corporate finance theory. This integration of economic theory has profoundly influenced corporate operations and corporate law teaching, and this impact will continue. This collection of essays focuses on introducing the various theories that are starkly opposed in the field of corporate law, as well as the fundamental economic principles that gave rise to these theories. Additionally, we strive to provide students with a realistic overview of the corporate law research landscape, which may be unfamiliar to them, through extensive and flourishing empirical research findings in corporate governance. Due to Adolf Berle and Gardiner Means' profound analysis of the problems arising from the separation of ownership and control, the key characteristics of publicly traded companies became clear: the managers who operate the company do not own it. Berle and Means argued that this separation led to many organizational inefficiencies, as the interests of the company's owners do not always align with those of the managers. Such problems are known as agency problems. As this collection of essays illustrates, much of corporate law revolves around how to address agency problems. The papers collected in this book analyze this issue from different perspectives using organizational theory from economics and corporate finance theory, and propose various solutions. I have personally used materials from this book in corporate law and corporate finance classes. When editing this book, we intentionally designed it as a teaching tool for discussions in corporate law classrooms. Additionally, we structured each chapter with key points and questions to allow readers to read independently and guide themselves. The essays have been extensively edited to enhance usability. We compressed the mathematical calculations and formulas in the drafts but left the data in the key points intact to illustrate certain concepts. Of course, this approach is risky, as it loses the complexity of academic writing and may give the impression that creating a theory does not lead to ambiguities in understanding. To minimize this misconception, I intentionally arranged related essays with divergent views alongside their respective key points. Furthermore, the reference lists and footnotes in the essay excerpts have been omitted—to enhance readability and suitability for teaching, at the expense of the precision of the excerpts and the convenience of tracing citations. If readers are interested in the excerpts, they can refer to the original papers.