REFORMING CORPORATE GOVERNANCE - REDIRECTING THE EUROPEAN AGENDA

Corporate governance reform is in the air. This article warns against partial and hastily conceived interventions in complex and fragile gov ernance arrangements. Reformers should step back and analyse the funda mental links between corporate law and corporate finance, and between corporate governance and the rest of the economic and legal system. Re form efforts should not meddle with specific ownership and control str uctures. Specific problems like the poor liquidity of particular stock markets and poor protection of minority shareholders in some countrie s should be addressed directly. Fundamental reform of corporate govern ance is probably desirable in certain countries, but will require far- reaching and county-specific changes in the economic system. Reform is thus best handled at the level of individual member states. Initiativ es to harmonize the structure and control of corporations at the Europ ean Union level are bound to fail, and the prospects for specific prop osals like the European company statute are bleak at best. A European Commission 'Corporate Governance Policy' should focus on promoting tra nsparency and the dissemination of information.