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6 - Structural Limits and Structural Opportunities for Shareholder Regulation

from Part II - Infusing Corporate Social Responsibility in Corporate Governance

Published online by Cambridge University Press:  15 June 2023

Onyeka K. Osuji
Affiliation:
University of Essex
Franklin N. Ngwu
Affiliation:
Pan-Atlantic University Lagos Business School, Nigeria
Gary Lynch-Wood
Affiliation:
University of Manchester School of Law
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Summary

Increasing regulatory oversight to control shareholders is bound to underperform. This is because it rests on an invalid assumption, namely that shareholders are better controlled and better steered when regulatory stringency is increased. The assumption runs counter to the conditions that a regulation must require of shareholders, owing to those conditional requirements being unevenly matched by shareholders. Specifically, since shareholders vary in what is required of them by a regulation, the increase of regulatory oversight necessitates that some shareholders will fail to respond, some will comply with what is required, and others will do more. Increasing regulatory oversight does not therefore address the fundamental problem of there being pre-existing deficiencies in stakeholder capacities to comply. To better address the problem, a minmax approach to regulation is proposed. The main benefit of minmax is that it aligns itself to shareholder differences, helping to reduce non-compliance while simultaneously encouraging beyond-compliance behaviour.

Type
Chapter
Information
Corporate Social Responsibility Across the Globe
Innovative Resolution of Regulatory and Governance Challenges
, pp. 132 - 154
Publisher: Cambridge University Press
Print publication year: 2023

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