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Article

Access_open The Norm of Integrity in Corporate Governance Codes: Could It Be Made Enforceable?

Journal The Dovenschmidt Quarterly, Issue 2 2015
Keywords corporate governance, integrity, legal strategies, Goldman Sachs
Authors B.T.M. Steins Bisschop
AbstractAuthor's information

    The faring of Goldman Sachs during the financial crisis of 2008 is discussed against the background of legal instruments that were employed to avoid its failure. This discussion leads to the conclusion that in this case, the limits of classical legal instruments were reached. To further good corporate governance, the legal relevance of the term ‘integrity’ is explored. It is concluded that the legal term of integrity is used universally in corporate governance codes, but is not operational and therefore not enforceable. An attempt is made to redefine this general principle into a more operational term. This is tested in the case of Goldman Sachs’ executive Jon Winkelried. It is assumed that he has violated the standard of integrity but also that there were no enforceable legal means to sanction his behaviour. The conclusion is that the more operational interpretation of the term integrity could, in this case, have resulted in an enforceable legal instrument to sanction behaviour that is contrary to the norm of integrity. This operational term of integrity could aid in the debate on furthering good corporate governance through enforceable legal strategies.


B.T.M. Steins Bisschop
Prof. Dr. Bas T.M. Steins Bisschop holds a chair Corporate Law and Governance at the Faculty of Law of Maastricht University and a chair Corporate Law at Nyenrode Business University. He is partner of a boutique law firm in The Hague, The Netherlands.
Article

Access_open From Individuals to Organizations: The Puzzle of Organizational Liability in Tort Law

Journal The Dovenschmidt Quarterly, Issue 2 2015
Keywords organizational liability, tort law, organizational design, organizational wrongdoing, law and economics
Authors Klaus Heine and Kateryna Grabovets
AbstractAuthor's information

    Organizational accidents have two generic sources: individual wrongdoings and organizational failures. Economic analysis of tort law is methodologically based on the “fiction” (Gordon 2013) of a rational individual, from which “simple rules for a complex world” (Epstein 1995) are derived. As a result, organizational wrongdoing boils down to a simple principal-agent problem, neglecting the complexity of organizational reality. We shed more light on organizational factors as a separate trigger of organizational wrongdoing. We take an interdisciplinary perspective on the problem, which challenges traditional economic analysis of tort law with insights drawn from organizational science. Moreover, we demonstrate how tort law and economic analysis can be enriched with these insights.


Klaus Heine
Prof. Dr. Klaus Heine (Corresponding author), Jean Monnet Chair of Economic Analysis of European Law, Erasmus School of Law – RILE, Erasmus University Rotterdam, Burgemeester Oudlaan 50, Room J6-59, Postbus 1738, NL-3000 DR Rotterdam, The Netherlands. Tel: 0031 (0)10 4082691; Fax: 0031 (0)10 4089191.

Kateryna Grabovets
Dr. Kateryna Grabovets, Rotterdam Business School (RBS), Rotterdam University of​Applied‍ Sci‍ences,‍ Kralingse Zoom 91, Room C3.121, 3063 ND Rotterdam; P.O. Box 25035, 3001 HA Rotterdam, The Netherlands.​Tel:‍ 0031‍ (0)10‍ 7946243. k.a.grabovets@hr.nl
Article

Access_open Corporate Social Responsibility via Shareholders’ Proposals

Journal The Dovenschmidt Quarterly, Issue 1 2015
Keywords corporate social responsibility, shareholders, Rule 14a-8, social proposals, strategy
Authors Maria Paz Godoy Uson
AbstractAuthor's information

    Can shareholders’ proposals be considered as a mainstream alternative to incorporate social and environmental policies into the core businesses strategy? Proposing non-financial resolutions at the general meeting of shareholders is a form of shareholders’ activism that is shaping company’s direction. The American court case Lovenheim v. Iroquois Brands, Ltd. confirms that social and environmental issues, when significantly related to the core business, can give rise to new business directions firmly promoted by shareholders, resting authorial power to the board of directors in conducting the company’s direction. The US SEC Rule 14a-8 is widely used by social activists and institutional investors to influence the direction of business in becoming more sustainable. In virtue of the American Rule 14a-8, shareholders may include proposals in the company’s proxy materials and, thereby, compel a vote on the issue at the annual shareholders’ meeting. The result is that American shareholders’ proposals are being considered as an effective gateway to improve corporations’ social and environmental behaviour. This article examines, from a comparative perspective, the further developments of shareholders’ social proposals with the attempt to incorporate social and environmental policies into the core business. The article also suggests that the increasing demand of social proposals promoted by American shareholders versus the limited activity of shareholders’ proposals in Continental European jurisdictions is precipitating the process of converge between the main corporate governance models; the shareholder-oriented model and the stakeholder-oriented model, respectively. The issue of CSR via shareholders’ proposals as presented here is primarily based on literature and various cases related to SEC 14a-8, more in particular on lessons drawn from Lovenheim v. Iroquois Brands, Ltd.


Maria Paz Godoy Uson
PhD Fellow Maastricht University.
Article

Access_open Independent Supervisory Directors in Family-Controlled Publicly Listed Corporations

Is There a Need to Revisit the EU Independence Standards?

Journal The Dovenschmidt Quarterly, Issue 1 2015
Keywords corporate governance, board independence, independent non-executive or supervisory directors, listed family businesses, minority expropriation problem
Authors Fabian Imach
AbstractAuthor's information

    This contribution analyzes whether the current focus of the EU regulator on empowering independent directors is effective in corporations with a concentrated (family) ownership structure. The basic hypothesis of this contribution is that, contrary to the excessively optimistic expectations of the EU regulator, there are serious inefficiencies in the concept of independent directors when it comes to concentrated (family) ownership structures. The contribution relies on a series of empirical studies indicating a positive correlation between operating performance and family influence in European stock corporations.


Fabian Imach
Fabian Imach is management consultant at Societaet CHORVS AG, Gesellschaft für disruptive Wettbewerbsgestaltung in Düsseldorf. He has previously worked for BMW AG, JAFFÉ Rechtsanwälte Insolvenzverwalter (Lawyers and Insolvency Administrators) and Porsche Consulting GmbH. He holds a Master degree from Maastricht University, Faculty of Law.
Article

Access_open Transnationalization of Agricultural Cooperatives in Europe

Journal The Dovenschmidt Quarterly, Issue 4 2014
Keywords agriculture, agrifood, cooperatives, internationalization, transnationalization
Authors Jos Bijman, Perttu Pyykkönen and Petri Ollila
AbstractAuthor's information

    Agricultural cooperatives in Europe are increasingly expanding beyond their home countries. A number of these cooperatives have become transnational cooperatives, which means that they have members in more than one country. Examples can be found particularly in the dairy and fruit and vegetables industry. This article presents an overview of the recent internationalization and transnationalization processes among agricultural cooperatives in Europe and is the first academic publication that provides empirical data on cross-border membership. The article discusses the pros and cons of having members in several countries, as well as the different trajectories along which cooperatives may become transnational. Transnationalization entails substantial challenges for the member-cooperative relationship due to differences in culture, language, legislation and business practices. The professional management usually prefers an internationalization strategy above a transnationalization strategy. While further internationalization of agricultural cooperatives is expected, foreign membership will continue to be a major challenge for boards of directors.


Jos Bijman
Dr. Jos Bijman, Management Studies Group, Wageningen University.

Perttu Pyykkönen
Dr. Perttu Pyykkönen, Pellervo Economic Research PTT, Helsinki.

Petri Ollila
Dr. Petri Ollila, Department of Economics and Management, University of Helsinki.
Article

Access_open Business Enterprises and the Environment

Corporate Environmental Responsibility

Journal The Dovenschmidt Quarterly, Issue 4 2013
Keywords Corporate Environmental Responsibility, Environmental Due Diligence, Environmental CSR, Business enterprises and the environment, Environmental complement to Ruggie Framework
Authors Katinka D. Jesse and Erik V. Koppe
AbstractAuthor's information

    In 2011, following his 2005 initial mandate of the UN Commission on Human Rights and his extended 2008 mandate of the UN Human Rights Council, the Special Representative of the Secretary-General (SRSG) on the issues of human rights and transnational corporations and other business enterprises, Professor John Ruggie, issued the final text of the ‘Guiding Principles for the Implementation of the United Nations “Protect, Respect and Remedy Framework”‘. The 2008 Framework on Business and Human Rights and the complementing 2011 Guiding Principles consist of three pillars: the duty of states to protect human rights, the responsibility of business enterprises to respect human rights, and access to remedies for victims of human rights abuses. They currently qualify as the dominant paradigm in the corporate social responsibility (CSR) discourse, also because they now form part of various soft law and self-regulation initiatives. The Framework and Guiding Principles do not, however, specifically focus on environmental issues, but their systematic approach and structure do provide a model to address state duties and business responsibilities to care of the environment. This article is intended to complement the UN Framework and Guiding Principles on business and human rights with principles in the field of business and the environment. Hence, it is submitted that states have a customary duty to care for the environment; it is similarly submitted that business enterprises have a responsibility to care for the environment; and it is submitted that stakeholders must have access to remedies in relation to breaches of these duties and responsibilities.


Katinka D. Jesse
Dr. Katinka D. Jesse is post-doctoral research fellow at North-West University, South Africa.

Erik V. Koppe
Dr. Erik V. Koppe is assistant professor of public international law at Leiden Law School, The Netherlands. This article is partly based on research conducted by Jesse and Koppe as HUGO Fellows at the Netherlands Institute for Advanced Studies in Wassenaar in the fall of 2011.
Article

Access_open Multinationals and Transparency in Foreign Direct Liability Cases

The Prospects for Obtaining Evidence under the Dutch Civil Procedural Regime on the Production of Exhibits

Journal The Dovenschmidt Quarterly, Issue 3 2013
Keywords foreign direct liability, corporate social responsibility, transparency document disclosure, Dutch Shell Nigeria case
Authors Liesbeth F.H. Enneking
AbstractAuthor's information

    On 30 January 2013, the The Hague district court rendered a final judgment with respect to a number of civil liability claims against Royal Dutch Shell (RDS) and its Nigerian subsidiary Shell Petroleum Development Company of Nigeria (SPDC) that had been pursued by four Nigerian farmers and the Dutch NGO Milieudefensie in relation to various oil spills from SPDC-operated pipelines in the Nigerian Niger Delta. This case is the first Dutch example of a broader, worldwide trend towards similar transnational civil liability procedures against multinational corporations for harm caused to people and planet in developing host countries. This worldwide trend towards so-called ‘foreign direct liability cases’ and the Dutch Shell Nigeria case in particular raise many interesting socio-political as well as legal questions. This article will focus on the question what the prospects are for plaintiffs seeking to pursue such claims before a Dutch court when it comes to obtaining evidence under the Dutch civil procedural regime on the production of exhibits. This is a highly relevant question, since the proceedings in the Dutch Shell Nigeria case seem to indicate that the relatively restrictive Dutch regime on the production of exhibits in civil procedures may potentially impose a structural barrier on the access to remedies before Dutch courts of the victims of corporate violations of people and planet abroad.


Liesbeth F.H. Enneking
Liesbeth Enneking is a Postdoctoral Research Fellow at UCALL, Utrecht University’s multidisciplinary Centre for Accountability and Liability Law, and an Assistant Professor of Private International Law at Utrecht University’s Molengraaff Institute for Private Law. The author would like to thank prof. I. Giesen for comments on an earlier version of this article.
Article

Access_open Microfinance: Dreams and Reality

Journal The Dovenschmidt Quarterly, Issue 2 2013
Keywords microfinance, economic development, microfinance success, Institutions, law and economics
Authors Katherine Helen Mary Hunt
AbstractAuthor's information

    Microfinance is an area of research whose popularity is reflected by the unique potential for wide-ranging socioeconomic outcomes that support political goals unmatched by alternative avenues for financial support. However, despite the large amounts of financial resources funding microfinance across the world, and glorious potential economic benefits, there is no consensus regarding the success or failure of microfinance in achieving socioeconomic political goals. This article examines the empirical literature on microfinance to establish where microfinance has developed from, the organization of microfinance institutions (MFIs), the success or failure of microfinance, and future research methodological possibilities. It has been found that the success or failure of microfinance depends on the benchmarks to which it is measured. From a social empowerment perspective, microfinance success has been observed. However, from an economic development perspective the results are equivocal. The success of microfinance is related to the mission of DQ because of the interdisciplinary approach to research and the effects of microfinance across social and economic fields. Further, microfinance continues to be an avenue for the practical realization of corporate social responsibility (CSR) organizational goals and thus it is of relevance to evaluate success in this industry to ensure the efficient and continued achievement of political goals.


Katherine Helen Mary Hunt
Erasmus University Rotterdam, Rotterdam Institute of Law and Economics.
Article

Access_open The Quest for Behavioural Antitrust

Beyond the Label Battle, Towards a Cognitive Approach

Journal The Dovenschmidt Quarterly, Issue 2 2013
Keywords antitrust, behavioural economics, cognitive economics and law, predatory pricing, intent
Authors Luca Arnaudo
AbstractAuthor's information

    Over the past two decades behavioural economics has gained widespread consensus, and, as a consequence, is affecting many areas of law and economics. Antitrust is currently providing an interesting case study of this cultural-academic trend with a growing number of articles and comments focusing on “behavioural antritrust”. This article considers the state of the art of the behavioural approach to antitrust, taking the case of predatory pricing as useful test-bed for better evaluating practical perspectives of such an approach. The article suggests a “step beyond” by sketching a cognitive upgrade of antitrust. This move is coherent with a broader cognitive law framework that is in line with what is happening within contemporary economic theory.


Luca Arnaudo
Luca Arnaudo, Ph.D. Italian Competition Authority, Investigative Directorate Rome. This article benefited from comments and criticism from Harry Gerla, Giacomo Luchetta, Roberto Pardolesi, Maurice Stucke, participants at the VII National Convention of the Italian Society of Law and Economics, and two anonymous referees; usual disclaimers apply. Please send any comments to lucarnaudo@gmail.com.
Article

Access_open A Description of the Historical Developments in Standard Setting and Regulations for Auditors and the Audit Firms in an International Perspective

Journal The Dovenschmidt Quarterly, Issue 2 2013
Keywords Audit profession, international audit regulations, public-interest entities, historical developments
Authors Paul van der Zanden and Peter M. van der Zanden
AbstractAuthor's information

    The article discusses the historical developments within the audit profession as well as the developments in the rules and regulations relating to this profession. It does so in an international perspective. The authors compare the traditionally more Anglo-Saxon oriented approach with the traditionally more continental European approach. They discuss the influence and impact of these different approaches on each other as well as the impact of this process on regulation on a European level and implementation thereof on a local level. The developments in the Netherlands, which evidence this process, are used as an illustration. Throughout the article the authors also make some critical observations and notes with respect to the developments discussed.


Paul van der Zanden
Paul van der Zanden, Attorney at law, Banning N.V.

Peter M. van der Zanden
Peter M. van der Zanden, Emeritus professor Financial Accounting and former partner Ernst & Young.
Article

Access_open Corporate Governance of Banks

Is More Board Independence the Solution?

Journal The Dovenschmidt Quarterly, Issue 2 2013
Authors Edyta M. Dorenbos and Alessio M. Pacces
Author's information

Edyta M. Dorenbos
Research fellow, Tilburg Law School, Department of Business Law and European Banking Center, Tilburg School of Economics and Management, Tilburg University, the Netherlands.

Alessio M. Pacces
Professor of Law and Finance, Erasmus School of Law, Erasmus University Rotterdam and Research Associate, European Corporate Governance Institute. We thank Sarah van den Brand for valuable research assistance.

    In this article a non-binding global standard for solution of cross-border insolvency proceedings is introduced. These Global Principles for Cooperation in International Insolvency Cases can be used both in civil-law as well as common-law jurisdictions, and aim to cover all jurisdictions in the world. They are addressed to judges, insolvency practitioners and scholars, and aim to contribute to an improved global architecture of international insolvency.


Bob Wessels
Prof. Dr. Bob Wessels is an independent legal counsel in Dordrecht, The Netherlands, and professor International Insolvency Law, University of Leiden, School of Law. He can be reached at: info@bobwessels.nl.
Article

Access_open Climate Change

A Major Challenge and a Serious Threat to Enterprises

Journal The Dovenschmidt Quarterly, Issue 1 2013
Keywords volgt
Authors Elbert R. de Jong and Jaap Spier
AbstractAuthor's information

    volgt


Elbert R. de Jong
Elbert de Jong is PhD candidate at the Molengraaff Institute for Private Law, Utrecht University.

Jaap Spier
Jaap Spier is Advocate-General in the Supreme Court of The Netherlands and Honorary Professor at Maastricht University.
Article

Access_open Law and China’s Economic Growth

A Macroeconomic Perspective

Journal The Dovenschmidt Quarterly, Issue 1 2012
Keywords China, economic imbalance, factor markets, economic policies, law and regulations
Authors Guangdong Xu
AbstractAuthor's information

    China is now stuck in an investment-driven growth pattern that has helped it achieve excessive economic growth in the short run but at the cost of environmental quality, ordinary citizens’ welfare, and long-term economic health. Two main factors can be identified as responsible for the formation and continuation of the current growth pattern. One is economic policy, especially fiscal and financial policies, which contribute to the decline in household consumption by depressing household disposable income and reducing social services provided by the government. The other is the law and regulations that the government has used to subsidize investment and production by distorting factor markets, including markets for capital, land, labor, energy, and environment. A systematic legal and institutional reform whose purpose is to liberalize factor markets is therefore required to rebalance China’s economy.


Guangdong Xu
China University of Political Science and Law.
Article

Access_open Boosting Our Future Quotient

Journal The Dovenschmidt Quarterly, Issue 1 2012
Keywords intergenerational, future-readiness, paradigm shift, future quotient, leadership dimensions, sustainability
Authors John Elkington
AbstractAuthor's information

    This article argues that efforts to implement CSR and sustainability will need increasingly long-term strategy and action, at a time when both our financial and ecological systems are in growing crisis. The resulting need to wind down dysfunctional economic and business models of the nineteenth and twentieth century is increasingly apparent. New ones now need be created that are fit for the future. This will be a future with powerful new players (e.g. China, India, Brazil) and with more than 9 billion people in a world already in “ecological overshoot. We need to the opportunity to create and shape a new order that will meet the needs of present and future generations.The article introduces the FQ concept, spotlights some key dimensions of high FQ-leadership and begins to sketch out a method to measure the future-readiness of leaders. In this context, the MindTime concept is presented as a potential tool to identify and evolve the relevant styles of thinking. The author identifies some sectors with a particular propensity for long-term thinking and concludes that high-FQ leaders demonstrate a number of specific characteristic, summarized here in what is dubbed the 7Cs approach.


John Elkington
Executive Chairman of Volans (<www.volans.com>) and Non-Executive Director at SustainAbility (<www.sustainability.com>).
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