Convergence Goes Both Ways: An Alternative Perspective on the Convergence of Corporate Governance Systems

The possible convergence of international systems of corporate governance has become the topic of a lively debate. In opposition to the political theory (Roe 1991, 1994), Gilson (2000) and Coffee (1999) have persuasively argued that although little formal convergence may be taking place in ownership and board structure, corporate behaviour seems to be converging in a functional sense. This paper reviews Coffees argument and some of the ensuing debate emphasising internationalisation of equity markets as the powerful driving force behind convergence. But while the debate has focused rather narrowly on convergence of European governance to American standards, I argue that US corporate governance has also converged to European standards: insider ownership and managerial incentives have increased; outside board members, independent subcommittees and chairmen have become more common and the banking system has been deregulated to allow banks to play a more active governance role.