16 Theoretical Inq. L. 1 (2015)

handle is hein.journals/thinla16 and id is 1 raw text is: 







        The Corporate Governance

        Movement, Banks, and the

                   Financial Crisis



                        Brian R. Cheffins *

    This Article discusses why a corporate governance movement that
    commenced in the United States in the 1970s became an entrenched
    feature ofAmerican capitalism and describes how the chronology
    differed in a potentially crucial way for banks. The Article explains
    corporate governance s emergence and staying power by reference to
    changing market conditions and a deregulation trend that provided
    executives with unprecedented managerial discretion as the twentieth
    century drew to a close. With banking the historicalpattern paralleled
    general trends in large measure. Still, while the imperial CEO who
    achieved prominence in the 1980s became outmoded for the most
    part after corporate scandals at the start of the 2000s, this was not
    the case with large financial companies. The continued boldness of
    star CEOs in the financial services industry plausibly contributed
    to the market turmoil of 2008, but the financial crisis emphatically
    ended the corporate governance 'free pass banks had enjoyed.


                          INTRODUCTION

It has been well known since at least the 1932 publication of Adolf Berle
and Gardiner Means's The Modern Corporation and Private Property that
shareholder passivity creates latitude for top executives of U.S. public companies





    Faculty of Law, University of Cambridge. The author is grateful for feedback
    from Carsten Gemer-Beuerle, Edmund Schuster and the participants at the
    January 2014 conference on Financial Regulation and Comparative Corporate
    Governance at Tel Aviv University Faculty of Law.

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