Reassessing the End of History: Directors' Duties and Shareholders' Rights in Comparative Context

Determining the proper scope of directors' duties—and to whom those duties are owed—is among the most enduring issues in corporate legal scholarship. For decades, academic conceptions of corporate governance have fallen along two opposing lines: On the one side, the "shareholder primacy" model, historically associated with the law and economics movement, argues that fiduciary duties should be limited to maximizing shareholder welfare, and that the interests of corporate constituencies such as consumers, suppliers, and employees are better protected through private contracting or public legislation. On the other side, the "stakeholder" model of corporate governance argues for a broader conception of fiduciary duties, according to which directors are permitted (or even required) to consider a wider range of constituency interests. In the last 30 years, shareholder primacy attained sufficient influence for Henry Hansmann and Reinier Kraakman to famously declare "The End of History for Corporate Law," asserting that shareholder welfare was the functional priority in most corporate law jurisdictions around the world. More recently, however, a resurgence of traditional stakeholder theory—now in the form of "environmental, social, and governance" advocacy—has become increasingly influential among scholars, investors, and managers of corporations themselves. Thus, notwithstanding Hansmann and Kraakman's triumphalist declaration, whether history has in fact ended remains an open empirical question.

To help answer this question, this article presents a quantitative study of directors' duties and shareholders' rights in 60 jurisdictions around the world. The results of this study are as follows: (1) Corporate law appears to have converged on a standard model of shareholder primacy, the defining feature of which is democratic accountability to shareholders; (2) Although the content of fiduciary duties varies across jurisdictions, these duties appear to have little effect on corporate legal outcomes; and (3) The standard model of shareholder primacy differs from Delaware law, which is a surprising outlier among global jurisdictions. These results raise important issues regarding the direction of corporate governance, and suggest that academic emphasis on fiduciary duties as determinative of corporate decision making may be misplaced.