93 Nw. U. L. Rev. 641 (1998-1999)
Future As History: The Prospects for Global Convergence in Corporate Governance and Its Implications

handle is hein.journals/illlr93 and id is 651 raw text is: Copyright 1999 by John C. Coffee, Jr.                                    Printed in U.S.A.
Northwe ten Univerity Law Review                                           Vol. 93, No. 3
Articles
THE FUTURE AS HISTORY: THE PROSPECTS FOR
GLOBAL CONVERGENCE IN CORPORATE
GOVERNANCE AND ITS IMPLICATIONS
John C. Coffee, Jr.*
What forces explain corporate structure and shareholder behavior? For
decades this question has gone unasked, as both corporate law scholars and
practitioners tacitly accepted the answer given in 1932 by Adolf Berle and
Gardiner Means that the separation of ownership and control stemming
from ownership fragmentation explained and assured shareholder passiv-
ity.' Over this decade, however, corporate law scholars have recognized
that this standard answer begs an essential prior question: if ownership
fragmentation explains shareholder passivity, what explains ownership
fragmentation? Although the Berle and Means model assumed that large-
scale enterprises could raise sufficient capital to conduct their operations
only by attracting a large number of equity investors, contemporary empiri-
cal evidence finds that, even at the level of the largest firms, dispersed share
ownership is a localized phenomenon, largely limited to the United States
and Great Britain. Not only does the latest comparative research demon-
strate that concentrated, not dispersed, ownership is the dominant world-
wide pattern,2 but in-depth studies of individual countries show that share-
* Adolf A. Berle Professor of Law at Columbia University Law School. The author wishes to ac-
knowledge helpful comments and assistance from his colleagues Melvin A. Eisenberg, Ronald Gilson,
Victor Goldberg and Jeffrey Gordon, and also from Merritt Fox, as well as from participants at law and
economics seminars at the Universities of Kansas and Michigan. This Article is intended as a first in-
stallment of the lectures that the author will deliver in early 2000 as part of the Julius Rosenthal Foun-
dation Lecture Series at Northwestern University School of Law.
I See ADOLF A. BERLE & GARDINER C. MEANS, JR., THE MODERN CORPORATION AND PRIVATE
PROPERTY (1932). For the first reconsiderations of this thesis, see Bernard S. Black, Shareholder Pas-
sivity Reexamined, 89 MICH. L. REv. 520 (1990); Alfred F. Conard, Beyond Managerialism: Investor
Capitalism?, 22 U. MICH. J.L. REFORM 117 (1988).
2 For the fullest discussion of this point and detailed evidence from the 27 principal corporate law
jurisdictions, see Rafael La Porta et al., Corporate Ownership Around the World (June 1998) (visited
March 3, 1999) <http://nberws.nber.org/papers/W6625> (unpublished manuscript, available on the
Web). This study examines the ownership structure of the largest firms in 27 different countries, those
with the 26 largest Gross National Products and Mexico. Compiling data on the 10 largest publicly
traded nonfinancial companies in each country, the authors found that (i) slightly less than 40% qualified
as widely held, (ii) 30% were family controlled, (iii) 18% were state controlled, and (iv) the balance fell
into different categories not involving dispersed ownership. See id It should be underscored that this

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