United States

Background to the corporate governance debate in the USA

Corporate governance has formed a topic of discussion in the USA for a very long time and the materials on corporate governance in the USA are extensive. In such a dominant world economy, US debates on corporate governance will almost invariably influence corporate governance debates in other jurisdictions. It is, therefore, important to deal with corporate governance debates in the USA to lay the basis for understanding corporate governance models in other parts of the world.

The debate on corporate governance in the USA had started as early as 1932, when Berle and Means published their book, The Modern Corporation and Private Property. The importance of this debate was emphasised further by Mace's book, Directors: Myth and Reality, published in 1971, but the discussion became really heated in 1982 with the publication by the American Law Institute (ALI) of its Principles of Corporate Governance and Structure: Restatement and Recommendations. This project, which had started off quite modestly, resulted in a stream of publications on the topic of corporate governance in the USA. The Proposed Final Draft (later termed Principles of Corporate Governance and Structure: Analysis and Recommendations) was only approved in May 1992. However, publications on this topic did not stop there.