From Corporate Law to Corporate Governance
Document Type
Book Chapter
Publication Date
12-2025
Abstract
This chapter traces the shift from corporate law to corporate governance, beginning with Bayless Manning’s claim that corporate statutes are hollow and Jensen and Meckling’s reframing of the firm as a nexus of contracts, which introduces agency cost theory and the pursuit of shareholder alignment. It explains governance as the corporation’s operating system, where legal rules form only a skeleton, while non-legal processes such as information flows, decision-making structures, and monitoring mechanisms constitute its living substance. The chapter shows how governance exhibits path dependence, shaped by complementarity and supermodularity, illustrated by the Japanese model and by broader varieties of capitalism, which tie corporate governance to labor markets, capital structures, and state institutions. It critiques efforts to reduce this complexity to single-factor models — stakeholder, team production, director primacy, and shareholder primacy — and shows that each is partial, static, and insufficient to capture the dynamic interplay of markets, institutions, and corporate strategies. Finally, the chapter concludes that governance is inherently complex, contextual, and dynamic, shaped by the tension between stability and adaptability, and that the move from corporate law to corporate governance both reveals the challenges of reform and clarifies the problems scholars must confront.
Disciplines
Business Organizations Law | Law | Law and Politics
Recommended Citation
Ronald J. Gilson,
From Corporate Law to Corporate Governance,
The Oxford Handbook of Corporate Law and Governance, Jeffrey N. Gordon & Wolf-Georg Ringe (Eds.), Oxford University Press
(2025).
Available at:
https://scholarship.law.columbia.edu/faculty_scholarship/4772
Comments
This book chapter was initially published online December 18, 2025.