New Governance,Old Norms,and the Potential for Corporate Governance Reform

While the new governance approach to corporate governance offers intriguing ideas about participatory governance, it cannot evade the effects of economic self‐interest. This article addresses three nested concerns relating to the potential of new governance in the corporate context, using three specific examples that illustrate the challenges. The first case illustrates that new governance principles cannot be easily integrated with models of corporate governance that rest on the logic of shareholder primary. The second case study offers an example of a new governance type corporation, but illustrates that new governance faces thorny internal structural challenges, given economic incentives and power imbalance. The third example illustrates that even without these normative and structural problems, new governance would face issues arising out of current strategies employed by corporate decision makers to hedge their own personal risk through equity swaps and other derivatives products, which in turn create new incentives for shirking their responsibilities.