Setting the Bar

Corporate Governance 2.0

Professor Jeffrey Gordon and two of the world’s foremost business law scholars create an innovative class on comparative corporate governance that couldn’t be more timely

By Amy Miller

Winter 2009

As financial systems across the globe unravel, business and political leaders are closely scrutinizing the laws governing corporations. In order to correct current problems and avoid those of the future, the next generation of business attorneys must understand how and why corporate governance practices are changing. Professor Jeffrey N. Gordon hopes to lend a hand with a unique course that will help students analyze and learn from varying corporate governance approaches in nations across the globe.

“There’s a belief that better governance will lead to better companies and greater wealth,” Gordon says. “That’s going to give some countries a competitive edge over others.”

Last fall, about 30 students enrolled in the first course, which Gordon co-taught with two well-known legal experts in the field: John Armour, a law professor at Oxford University, and Simon Deakin, professor of law at the University of Cambridge. The three scholars knew each other’s work well, having met at professional and academic conferences over the years. Last summer, at a conference in the U.K., they decided that, given the teetering economic conditions, the time was right to teach a course on comparative corporate governance. And they agreed to teach it together. Armour is a regular visitor to the Law School, and Deakin planned to spend a sabbatical at the Law School, as well. So the three scholars pulled together materials for “Comparative Corporate Governance: A Dynamic Perspective.” The result was a resounding success.

“The course reflects a lot of what the Law School wants to do,” Gordon says, “which is to give students the chance to engage with faculty from Columbia and other leading universities throughout the world, taking on difficult, cutting-edge issues of law and
legal change.”

Ever since the creation of corporations, the laws regulating how companies operate have been an important part of business history, Gordon notes. Those laws can help explain the rise and fall of a family-run empire, or the origins of a global financial meltdown. The new course helps students better understand what factors lead to corporate governance change over time, and how similar reforms have played out in various nations. For example, it compares the rules in different countries that govern board structure and uses a comparative lens to analyze the different regimes that apply to corporate takeovers.

While the class examines the hazards financial bubbles can wreak on corporate governance systems, it also teaches a cautionary approach to modifications in governance. Whenever there is a financial scandal or widespread financial failure, regulation of corporate governance picks up speed; yet that can freeze short-term solutions in place and put a financial system’s long-term stability at risk, Gordon says.

The course lectures primarily focus on the United States, the United Kingdom and other European nations, and Japan, though students are encouraged to use theories from the course to explain corporate governance issues at play in, for example, South Korea or Brazil. 

“It’s a course that tries to reward the ambition of the students,” Gordon says, “and to train them to think in creative ways about the world they will become important professionals and actors in.”

Amy Miller is a reporter for Corporate Counsel and American Lawyer magazines.