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An Economic Efficiency Approach to Reforming Corporate Governance: The Case of Multiple Stakeholder Boards

  • Say H. GOO (a1)

This paper points out the problems of the current law on directors’ duties that forces directors to ignore stakeholder interests, with the unintended consequences of misallocation of resources and the weaknesses of a traditional legal approach to law reform, and uses multiple stakeholder boards as an example to demonstrate how an economic efficiency approach to law reform, adopting economic principles, could avoid some of the unintended consequences of a legal approach to law reform and help design better rules that promote allocative efficiency for the benefit of society as a whole. It argues that international organizations should take the lead in promoting the use of stakeholder directors in the board of directors of multinational corporations that have a history of corporate abuses for corporate decisions that have an impact on all stakeholders.

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Professor of Law, Faculty of Law, The University of Hong Kong. This paper is based on the author’s earlier research and paper: Goo & Klingler (2014). The author would like to thank the Hong Kong Research Grant Council for a Theme-Based Research Scheme grant for the project “Enhancing HK as an International Financial Centre” that enables the author to further his research for this paper. Correspondence to Say H. Goo, The University of Hong Kong, Faculty of Law, Pokfulam Road, Hong Kong. E-mail address:

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Ronald H. Coase (1937) “The Nature of the Firm.” 4 Economica, New Series 386405.

Ronald H. Coase (1960) “The Problem of Social Cost.” 3 The Journal of Law and Economics 144.

Lauren Cohen , Andrea Frazzini & Christopher J. Malloy (2012) “Hiring Cheerleaders: Board Appointments of ‘Independent’ Directors.” 58 Management Science 120.

Tom Price (2010) “Corporate Social Responsibility: Is Good Citizenship Good for the Bottom Line?” in CQ Researcher, ed., Issues for Debate in Corporate Social Responsibility, Selections from CQ Researcher, Los Angeles: Sage Publications, 124.

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Asian Journal of Law and Society
  • ISSN: 2052-9015
  • EISSN: 2052-9023
  • URL: /core/journals/asian-journal-of-law-and-society
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