Arbeitspapier, Unternehmensmitbestimmung und Unternehmenssteuerung 223
The U.S. is often seen as being the paradigmatic case of the shareholder-oriented or market-based model to corporate governance, and described in terms of several inter-related elements: activist institutional investors, an open market for corporate control, independent outside directors on the board, long-term equity-based compensation for executives, and gatekeepers who monitor the process of market disclosure. However, scandals surrounding Enron generated criticism and induced substantial changes through the Sarbanes-Oxley (SOX) legislation. This report reexamines the history and empirical evidence on U.S. corporate governance, showing how its evolution has been shaped by a negative form institutional complementarities - the limited effectiveness of one element creating externalities or limiting the effectiveness of other related elements, eventually leading to a systemic crisis. This perspective helps make the Enron case more understandable, but also shows the limited impact of SOX in fixing the system. The implications for the current economic crisis are explored.