The aim of the paper is to highlight the differences between the corporate governance systems in Anglo‐Saxon and Continental European countries, and to argue that legal convergence or isomorphism may become more of a problem than a solution in countries where an issue like minority shareholders' protection is the primary corporate governance problem.
The paper uses a number of surveys to support the trend of legal and ownership convergence in Anglo‐Saxon and Continental European countries. The main concern, in Continental European countries, is the expropriation of minority shareholders by the dominant major shareholders, whereas in Anglo‐Saxon firms the main concern is the expropriation of shareholders by the dominant managers (agency problem). Then it analyses the legal initiatives to determine the appropriateness of the legal framework with the fundamentals characteristics of corporations.
Regardless of the trend for ownership dispersion and convergence of securities laws and regulations observed in the last decade, the main characteristics of ownership structure remain unchanged and the two systems of corporate governance remain distinctively separate. The paper argues that legal‐regulative convergence is not adequate to achieve real corporate governance system convergence. As long as the fundamental differences of the corporate governance systems differ, legal and regulating isomorphism may be the cause of problems and not a solution.
The paper presents an alternative approach in legal‐regulatory framework formulation. It advocates the introduction of a different set of practices and legal initiatives for countries with different characteristics and corporate governance problems.
