The ability of corporations to operate efficiently and add value for investors is under threat from new laws being considered by governments to make corporations socially responsible. Unless directors introduce a new reporting architecture described below to simplify and enhance their role, they are likely to be burdened with additional duties, reporting, and compliance obligations.
Excessive regulation is strangling capitalism as described by P.D. and E.P. Jonson 11 years ago in their article “Financial regulation and moral suasion” on the Henry Thornton website July 1, 1994.
They identified the problems of relying on black letter and as an alternative recommended the use of moral persuasion, information, and incentives. Following this approach this article suggests governments’ exempt corporations from many of the detailed prescriptive and intrusive one size fits all provisions in corporate law and regulations on condition that they introduce creditable self-enforcing provisions in their corporate constitutions.
See full Article.
Posts
