Convergence, Diversity, and Divergence: The Two Axes of Corporate Law and Governance

Document Type

Book Chapter

Publication Date

12-2025

Abstract

This chapter examines the evolving dynamics of corporate law and governance along two axes: internal governance, which centers on shareholder value and the allocation of rents within firms, and externalities governance, which addresses broader social and environmental concerns. It traces how globalization, international institutions, and the spread of governance and stewardship codes drive partial convergence on internal governance standards, particularly through mechanisms such as independent directors, disclosure rules, and stewardship responsibilities, while national diversity and “faux convergence” remain. The chapter then shifts to the rise of externalities governance, shaped by ESG frameworks, the Paris Agreement, EU initiatives such as the Green Deal, and the International Sustainability Standards Board, which embed environmental and social concerns into corporate practices through disclosure and regulation. It highlights the EU’s ambitious project to globalize externalities governance through the “Brussels effect,” contrasting it with sharp divergence in the United States, where political, economic, and cultural factors fuel resistance to ESG norms and reinforce shareholder value and fossil fuel interests. Finally, the chapter concludes that while internal governance achieves functional convergence through the criterion of “investibility,” externalities governance remains volatile, contested, and fragmented, with the EU and US embodying starkly divergent paths that may shape the global trajectory of corporate governance.

Disciplines

Business Organizations Law | Law | Law and Politics

Comments

This book chapter was initially published online December 18, 2025.

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