Law as Bedrock: The Foundations of an Economy Dominated by Widely Held Public Companies.

In the field of comparative corporate governance, a thesis that is currently influential is that the ‘law matters’. The thinking is that laws which allow investors to feel confident about owning a tiny percentage of shares in a firm constitute the crucial ‘bedrock’ that underpins a US‐style economy where widely held public companies dominate. The paper outlines the normative implications which the ‘law matters’ thesis has for countries where diffuse share ownership is not the norm. It also draws upon the historical experience in the US and the UK to cast doubt on whether law is as pivotal as the thesis implies. Finally, the paper considers the dynamics that are likely to affect the pace of legislative change when reforms designed to foster the confidence of minority shareholders are on the agenda. [ABSTRACT FROM PUBLISHER]