¹ For historical work which addresses this issue, see R McQueen “Why High Court Judges make Poor Historians: The Corporations Act Case and Early Attempts to Establish a National System of Company Law in Australia”, which appears earlier in this volume of the Federal Law Review.

² (1990) 169 CLR 482.

³ The High Court held in New South Wales v Commonwealth, ibid, that the Commonwealth does not have the power to provide for the incorporation of companies.

⁴ HA J, Ford, Principles of Company Law (4th ed 1986), para 112Google Scholar. This quote is not contained in the 5th edition (1990) of Fords treatise.

⁵ See eg Senate Standing Committee on Constitutional and Legal Affairs, The Role of Parliament in Relation to the National Companies Scheme (1987) Ch 3.

⁶ This argument is evaluated in Part 4 of this article.

⁷ For an introduction to this debate, see Buxbaum, R M,“Federalism and Company Law201D; (1984) 82 Michigan L Rev 1163CrossRefGoogle Scholar.

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⁹ A subject that is always on the political agenda. For a recent contribution to the wider debate, see Economic Planning Advisory Council, Towards a More Cooperative Federalism? (1990).

¹⁰ (1990) 169 CI..R 482.

¹¹ The Australian Financial Review, 28 March 1990, 64.

¹² Editorial, The Australian Financial Review, 5 April 1990, 16. For similar arguments, see Editorial, The Australian Financial Review, 23 April 1990, 16 and Editorial, The Sydney Morning Herald,19 April 1990 12.

¹³ The Australian Financial Review, 24 April 1990, 4.

¹⁴ Letter from Mr Michael Duffy, Federal Attorney-General to the Editor, The Australian Financial Review, 18 October 1990, 16.

¹⁵ The Australian Financial Review, 21 May 1990, 5.

¹⁶ R, Baxt, “Australian Company Law: Quo Vadis?” (1990) 61 Charter 20, 21Google Scholar.

¹⁷ Mr Peter Costello, quoted in The Australian Financial Review, 29 May 1990, 1.

¹⁸ The Australian Financial Review, 17 April 1990, 3.

¹⁹ The Australian Financial Review, 19 April 1990, 5.

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²¹ Editorial, The Australian Financial Review, 5 April 1990, 16.

²² Discussed in The Australian Financial Review, 30 May 1990, 68.

²³ P, Costello, “Restoring Confidence in Corporate Morality” (1990) 34 Quadrant 20, 21Google Scholar. It should be noted that the author, the Federal Opposition Minister for Corporate Law Reform and Consumer Affairs, concludes by supporting national regulation of companies.

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³⁰ R A Musgrave and P B Musgrave supra n 27, 502. Social or public goods are characterised by nonrivalness and nonexcludability in consumption. Nonrivalness occurs “where A's partaking of the consumption benefits does not reduce the benefits derived by all others. The same benefits are available to all and without mutual interference”. Ibid 49. Nonexcludability occurs where it is impossible or too costly to exclude anyone from consuming a good. Ibid 49-50. Because of these characteristics, it is not feasible to provide public goods on an efficient basis via the usual market, that is, sale to individual consumers. Hence there is a role for government in providing public goods. An example frequently given of a public good is national defence. It is to be noted however that “In practice, nearly all publicly provided goods have both public and private good characteristics”. Supra n 29, 4. For further discussion, see JG, Head, “Public Goods: The Polar Case” in RM, Bird and Head, J G (eds), Modern Fiscal Issues (1972)CrossRefGoogle Scholar; Buchanan, J M, The Demand and Supply of Public Goods (1968)Google Scholar and JG, Head, Public Goods and Public Welfare (1974)Google Scholar.

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³³ Ibid 239. By economies of scale we mean economies which accrue because production is undenaken on a larger basis. For example, where an enterprise has increased its production of goods it may be able to negotiate a lower price for raw materials used in the production process because of the increased volume of raw materials it now purchases. This represents an economy of scale.

³⁴ Kitch, E W, “Regulation and the American Common Market” in Tatlock, A D (ed), Regulation, Federalism and Interstate ComrMrce (1981)Google Scholar. For an introduction to issues relevant to an economic theoiy of legislation, see Tollison, R D, “Public Choice and Legislation” (1984) 74 Virginia L Rev 339CrossRefGoogle Scholar.

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³⁷ Supra text at nn 17-22.

³⁸ Posner, R A, Economic Analysis of Law (3rd ed 1986) 504Google Scholar. See also Posner, R A, “Toward an Economic Theoiy of Federal Jurisdiction” (1982) 6 Harv J Law & Pub Policy 41Google Scholar.

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⁴¹ T, Lee and Trebilcock, M J, “Economic Mobility and Constitutional Reform” (1987) U Toronto LJ 268, 271CrossRefGoogle Scholar. For example, a state may encourage the establishment of industry by enacting pollution laws that are less stringent than those of its neighbouring states. Where those industries are established near the borders with other states, a large part of the cost of the government policy of encouraging industry, namely the pollution, will be borne by those neighbouring states.

⁴² S, Rose-Ackerman, “Docs Federalism Matter? Political Choice in a Federal Republic” (1981) 89 J Political Economy 1S2Google Scholar.

⁴³ The developments leading to the Formal Agreement are discussed supra n S, Ch 2.

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⁴⁷ CTS Corporation v Dynamics Corporation of America 481 US 69, 91 (1987).

⁴⁸ Supra n 46, 28-29.

⁴⁹ Bankruptcy Reform Act of 1978.

⁵⁰ The main acts are the Sherman Antitrust Act of 1890, the Federal Trade Commission Act of 1914, the Clayton Act of 1914 and the Robinson-Patman Act of 1935.

⁵¹ See the Securities Act of 1933 and the Securities Exchange Act of 1934.

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⁵³ Department of the State of Delaware, Incorporating in DellJware (1985) 3.

⁵⁴ R Baxt, supra text at n 16. See also P Costello, supra n 23.

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⁵⁷ Comment, “Law for Sale: A Swdy of the Delaware Corporation Law of 1967” (1969) 117 U Pennsylvania L Rev 861, 861-862.

⁵⁸ Report of the Corporation Law Revision Commission of New Jersey (1969) quoted in W L Cary, supra n 55, 666.

⁵⁹ Ibid 700-701.

⁶⁰ Ibid 701. One response to this proposal is that it is precisely these largest companies to which the market forces which operate to discipline management (infra text at nn 83-87) apply most clearly. To this extent, less government regulation may be warranted. However, it is of course these companies which wield most influence in society and which therefore should be subject to most scrutiny.

⁶¹ Supra text at nn 20-22.

⁶² DE, Schwartz, “Federalism and Corporate Governance” (1984) 45 Ohio State L J 545Google Scholar. See also DE, Schwartz, “A Case for Federal Chartering of Corporations” (1976) 31 Bus Lawyer 1125Google Scholar. More recently, Schwartz has argued that reform is required because “[t]he protections that corporation law provided to shareholders and to our economic community against the excesses and complacency of corporate directors and managers have undergone a general weakening”. DE, Schwartz, “Federal Chartering Revisited” (1988) 22 U Mich J Law Reform 7, 17Google Scholar.

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⁶⁴ Folk, E L, “State Statutes: Their Role in Prescribing Norms of Responsible Management Conduct” (1976) 31 Bus Lawyer 1031, 1034Google Scholar.

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⁶⁶ R, Nader, M, Green and J, Seligman, Taming the Giant Corporation (1976) 70-71Google Scholar. The authors continue: “The problem is ultimately one of power: how can we limit unaccountable power and how can we ensure that those who exercise managerial power are the best managers feasible?” Ibid.

⁶⁷ Supra text at nn 12-13.

⁶⁸ JC, Coffee, “The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards” (1987) 8 Cardozo L Rev 759, 770Google Scholar.

⁶⁹ The arguments concerning takeovers which, in a number of respects, can be distinguished from the more general laws regulating companies, are examined later in this article: see infra text at nn 137-172.

⁷⁰ LA, Bebchuk, “The Debate on Contractual Freedom in Corporate Law” (1989) 89 Col L Rev 1395, 1414Google Scholar.

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⁷⁴ Supra n 72, 275-276. A similar argument is advanced by DR, Fischel, “The 'Race to the Bottom' Revisited: Reflections on Recent Developments in Delaware's Corporation Law” (1982) 76 Northwestern U L Rev 913Google Scholar.

⁷⁵ This view is implicit in the argument of those commentators referred to in the text of the essay who support the national regulation of companies.

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⁸⁰ Fama, E F, “Agency Problems and the Theory of the Finn” (1980) 88 J Political Economy 288CrossRefGoogle Scholar.

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⁸³ DR Fischel, supra n 77, 1263.

⁸⁴ H N Butler, supra n 78.

⁸⁵ Easterbrook, F H and Fischel, D R, “The Proper Role of a Target's Management in Responding to a Tender Offer” (1981) 94 Harv L Rev 1161CrossRefGoogle Scholar.

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⁸⁷ H N Butler, supra n 78, 115-116.

⁸⁸ V, Brudney, “The Role of the Board of Directors: The ALI and its Critics” (1983) 37 U Miami L Rev 223, 235Google Scholar. See also V, Brudney, “Corporate Governance, Agency Costs, and the Rhetoric of Contract” (1985) 85 Col L Rev 1403Google Scholar. For further criticisms of the contractual theory of the corporation, see RM, Buxbaum, “Corporate Legitimacy, Economic Theory, and Legal Doctrine” (1984) 45 Ohio State L J 515Google Scholar; RC, Clark, “Agency Costs Versus Fiduciary Duties” in Pratt, J W and Zeckhauser, R J (eds), Principals and Agents: The Structure of Business (1985)Google Scholar; JC, Coffee, “No Exit? Opting Out, the Contractual Theory of the Corporation, and the Special Case of Remedies” (1988) 53 Brooklyn L Rev 919Google Scholar. Bratton, W B in “The Nexus of Contracts' Corporation: A Critical Appraisal” (1989) 74 Cornell L RevGoogle Scholar sees merit in the theory but argues that it has been overvalued.

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⁹² Ibid 1489.

⁹³ Ibid 1489-1495. See also MC, Jensen and Murphy, K J, “Performance Pay and Top–Management Incentives” (1990) 98 J Political Economy 225Google Scholar.

⁹⁴ Supra text at nn 72-74.

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⁹⁸ DR, Fischel, “Use of Modem Finance Theory in Securities Fraud Cases Involving Actively Traded Securities” (1982) 38 Bus Lawyer lGoogle Scholar; DR, Fischel, “Efficient Capital Markets, the Crash, and the Fraud on the Market Theory” (1989) 74 Cornell L Rev 907Google Scholar; Note, “The Fraud on the Market Theory and the Efficient Capital Markets Hypothesis: Applying a Consistent Standard” (1988) 14 J Corporation Law 443; B, Cornell and Morgan, R G, “Using Finance Theory to Measure Damages in Fraud on the Market Theory” (1990) 37 UCLA L Rev 883Google Scholar.

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¹⁰¹ Gordon, J N and LA, Kornhauser, “Efficient Markets, Costly Information, and Securities Research” (1985) 60 NYU L Rev 761Google Scholar. For a review of empirical tests of the ECMH in Australia, see Bishop, S R, Crapp, H R and Twite, G J, Corporate Finance (2nd ed 1988) 82-84Google Scholar.

¹⁰² Supra text at n 70.

¹⁰³ This is particularly so in the current economic climate in Australia where financial commentators and others are arguing for increased regulation or, at a minimum, more effective enforcement of existing regulations: see eg The Australian Financial Review, 1 February 1990, 64 and 30 August 1990, 60.

¹⁰⁴ IM, Ramsay, “Liability of Directors for Breach of Duty and the Scope of Indemnification and Insurance” (1987) 5 C & S LJ 129Google Scholar.

¹⁰⁵ Hanks, J J and Scriggins, L P, “Let Stockholders Decide: The Origins of the Maryland Director and Officer Liability Statute of 1988” (1989) 18 Baltimore L Rev 235, 237Google Scholar.

¹⁰⁶ DA, DeMott, “Limiting Directors' Liability” (1988) 66 Wash ULQ 295Google Scholar.

¹⁰⁷ TL, Hazen, “Corporate Directors' Accountability: The Race to the Bottom - The Second Lap” (1987) 66 North Carolina L Rev 171Google Scholar; TC, Lee, “Limiting Corporate Directors' Liability: Delaware's Section 102(b)(7) and the Erosion of the Directors' Duty of Care” (1987) 136 U Penn L Rev 239Google Scholar; Note, “Limiting Directors' Duty of Care Liability: An Analysis of Delaware's Charter Amendment Approach” (1987) 20 U Mich J Law Reform 543; Titus, R B, “Limiting Directors' Liability: The Case for a More Balanced Approach - the Corporate Governance Project Alternative” (1989) 11 Western New England L Rev 1Google Scholar.

¹⁰⁸ Schaffer, D S, “Delaware's Limit on Director Liability: How the Market for Incorporation Shapes Corporate Law” (1987) 10 Harv J Law & Pub Policy 665Google Scholar. The author notes that Delaware increased the number of new incorporations by 28 per cent in the six months following the enactment of the amendments. Ibid 688.

¹⁰⁹ V, Janjigian and Bolster, P J, “The Elimination of Director Liability and Stockholder Returns: An Empirical Investigation” (1990) 13 J Financial Research 53Google Scholar.

¹¹⁰ Ibid 60.

¹¹¹ See Branston, D M, “Assault on Another Citidel: Attempts to Cunail the Fiduciary Standard of Loyalty Applicable to Corporate Directors” (1988) 57 Fordham L Rev 375Google Scholar who surveys the views of those who propose this idea and concludes that opting-out of the fiduciary duty of loyalty will result in “[e]xtreme moral hazard, self-enrichment, tolerance of extreme ineptitude, or nepotism”. Ibid 392.

¹¹² Maryland Corporations and Associations Annotated Code, §2-405.2(a) cited in MA, Sargent, “Two Cheers for the Maryland Director and Officer Liability Statute” (1989) 18 Baltimore L Rev 278, 296Google Scholar. It has been argued that even these exceptions should be narrowed: Butler, H N and Ribstein, L E, “Free at Last? The Contractual Theory of the Corporation and the New Maryland Officer-Director Liability Provisions” (1989) 18 Baltimore L Rev 352, 363-364Google Scholar.

¹¹³ H N Butler and LE Ribstein, ibid 361.

¹¹⁴ See eg MA Eisenberg, supra n 91; Gordon, J N, “The Mandatory Structure of Corporate Law” (1989) 89 Col L Rev 1549CrossRefGoogle Scholar.

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¹¹⁶ P, Dodd and R, Leftwich, “The Market for Corporate Charters: 'Unhealthy Competition' Versus Federal Regulation” (1980) 53 J Business 259Google Scholar.

¹¹⁷ The evidence reviewed was the share prices of 140 companies listed on the New York Stock Exchange which reincorporated in Delaware over the period from 1927 to 1977.

¹¹⁸ Supra n 116, 282. For the period of 25 months preceding the change in incorporation it was found that shareholders in these companies earned increases in share prices of approximately 30 per cent. However, because these increases occurred prior to the date of reincorporation, the study does not inform us whether it was the reincorporation which affected the share price or something else. In fact, the authors suggest that a change in the state of incorporation is accompanied by changes in the production or financing activities of the companies. Ibid 28l. It might be inferred from this information that it is the anticipated benefits of the new production or financing activities which result in the increase in the share price rather than the change in the state of incorporation.

¹¹⁹ R, Romano, “Law as a Product: Some Pieces of the Incorporation Puzzle” (1985) 1 J Law, Economics and Organization 225Google Scholar.

¹²⁰ Ibid 272-273.

¹²¹ Ibid 250.

¹²² Ibid 279-80.

¹²³ Ibid 285. Romano has further refined her theory in a more recent article, “The State Competition Debate in Corporate Law” (1987) 8 Cardozo L Rev 709.

¹²⁴ Supra text at n 23.

¹²⁵ J C Coffee, supra n 68, 768.

¹²⁶ Ibid 769.

¹²⁷ Weiss, E J and White, L J, “Of Econometrics and Indeterminacy: A Study of Investors' Reactions to 'Changes' in Corporate Law” (1987) 75 Calif L Rev 551CrossRefGoogle Scholar.

¹²⁸ Ibid 602.

¹²⁹ Fox, M B, “The Role of the Market Model in Corporate Law Analysis: A Comment on Weiss and White” (1988) 76 Calif L Rev 1015CrossRefGoogle Scholar.

¹³⁰ Ibid 1021-1026. For the reply by Weiss, E J and White, L J, see “A Response to Professor Fox” (1988) 76 Calif L Rev 1047CrossRefGoogle Scholar.

¹³¹ Supra text at nn 73-87.

¹³² E J Weiss and L J White, supra n 127, 604. This '.s because “investors appreciate that the decisions do not foreshadow predictable differences in the outcome of future cases, since virtually all such cases will involve transactions that are potentially distinguishable from the cases that the Delaware courts have decided”. Ibid 602.

¹³³ Id.

¹³⁴ MB Fox, supra n 129, 1042-1043.

¹³⁵ R Romano, supra n 119.

¹³⁶ E J Weiss and L J White, supra n 127, 560.

¹³⁷ MC, Jensen, “Takeovers: Their Causes and Consequences” (1988) 2 J Economic Perspectives 21, 23Google Scholar.

¹³⁸ A, Shleifer and Vishny, R W, “Value Maximization and the Acquisition Process” (1988) 2 J Economic Perspectives 7, 17Google Scholar.

¹³⁹ C, Bradley, “Corporate Control: Markets and Rules” (1990) 53 Mod L Rev 170, 176Google Scholar.

¹⁴⁰ Ibid. See also J, Franks and C, Mayer, “Takeovers” (1990) 5 Economic Policy: A European Forum 191Google Scholar; H Bosch, supra n 44, Ch 13.

¹⁴¹ See eg the studies cited supra n 137.

¹⁴² Bureau of Industry Economics, Research Report 36: Mergers and Acquisitions, (1990). The takeovers studied were Boral's takeover of Blue Metal Industries in 1982 and Monier's takeover of Wunderlich in 1983 (both of these takeovers occurring in the roof tiles industry), Petef'11ville Industries' takeover of the Herbert Adams group of companies in 1986 (the pastry products industry) and the 1985 merger of Chloride Batteries Australia Ltd with the batteries division of Pacific Dunlop Ltd (the automotive batteries industry).

¹⁴³ Ibid 105-106.

¹⁴⁴ Ibid 106.

¹⁴⁵ JG, Howard, “Takeover Defences: A Reappraisal” (1990) 24 U Brit Col L Rev 53Google Scholar.

¹⁴⁶ See generally, T, Steel, “Defensive Tactics in Company Takeovers” (1986) 4 C &SLJ 30Google Scholar.

¹⁴⁷ R, Tomasic and B, Pentony. “Fast-Tracking Takeover Litigation and Alternatives to the Courts in Company Takeover Disputes” (1989) 17 ABL Rev 336Google Scholar and M, Rosenzweig, “Target Litigation” (1986) 85 Michigan L Rev 110Google Scholar.

¹⁴⁸ National Companies and Securities Commission, Defensive Schemes and the Dwies of Directors (1986).

¹⁴⁹ GA, Jarrell, Brickley, J A and Netter, J M, “The Market for Corporate Control: The Empirical Evidence Since 1980” (1988) 2 J Economic Perspectives 49Google Scholar. For a recent study examining the effect of defensive tactics on the share price of the offeror company rather than the target company, see Gilbert, E W and Lyn, E O, “The Impact of Target Managerial Resistance on the Shareholders of Bidding Firms” (1990) 17 J Bus Finance and Accounting 497CrossRefGoogle Scholar.

¹⁵⁰ CTS Corporation v Dynamics Corporation of America 481 US 69 (1987).

¹⁵¹ Weiss, E J, “A Proposal for a Federal Takeover Law” (1988) 9 Cardozo L Rev 1699, 1700Google Scholar. According to a recent report, 39 states now have some form of anti-takeover law: (1990) 76 American Bar Assoc J 24.

¹⁵² 15 USC §§78m(d)-(e), 78n(d)-(f).

¹⁵³ “If Congress, by a new statute, or the [Securities and Exchange Commission) (under some new, heroic rulemaking power granted by Congress) were to err on a nationwide basis, all the nation would be harmed. The states have experience - going back to the founding of the nation - with corporate governance and the law of fiduciary duties, a body of substantive law that must wisely consider and reconcile many competing considerations and adaptation to change”: M, Shipman, “The Case for Reasonable State Regulation of Corporate Takeovers: Some Observations Concerning the Ohio Experience”: (1988) 57 Cincinnati L Rev 507, 538Google Scholar. See also RA, Prentice, “The Role of States in Tender Offers: An Analysis of CTS” (1988) 1 Col Bus L Rev 1Google Scholar; RA, Booth, “The Problem With Federal Tender Offer Law” (1989) 77 Calif L Rev 707Google Scholar.

¹⁵⁴ MC Jensen, supra n 137, 45-46.

¹⁵⁵ Supra text at nn 78, 79, 84, 87.

¹⁵⁶ Butler, H N, “State Takeover Legislation, The Market for Corporate Charters, and the Scope of Federal Intervention: A Comment on Hitzeman, Indiana's Control Share Acquisition Statute” (1989) 27 American Business L J 291, 302CrossRefGoogle Scholar.

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¹⁵⁸ Butler, H N, “Corporation-Specific Anti-Takeover Statutes and the Market for Corporate Charters” [1988] Wisconsin L Rev 365, 367Google Scholar.

¹⁵⁹ JR, Macey, “State Anti-Takeover Legislation and the National Economy” [1988] Wisconsin L Rev 467, 470Google Scholar.

¹⁶⁰ This transfer of wealth occurs on a number of levels. First, shareholders of the target company are either denied the opportunity of receiving the offer for their shares because the takeover is thwarted by the state takeover statute or else receive on offer lower than that which they would have otherwise received because the state takeover statute imposes additional costs on the offeror company which reduce the price it is prepared to pay for the shares. Secondly, to the extent that the state statutes weaken the disciplining effect of the market for corporate control, this allows managers more latitude in pursuing their own interests rather than those of shareholders.

¹⁶¹ Kozyris, P J, “The Federal Role in Corporate Takeovers: A Frameworlc for a Limited Second Congressional Intervention to Protect the Free Market” (1990) 51 Ohio State L J 263, 267Google Scholar.

¹⁶² Garfield, A E, “State Competence to Regulate Corporate Takeovers: Lessons From State Takeover Statutes” (1989) 17 Hofstra L Rev 535Google Scholar.

¹⁶³ M, Ryngaert and Netter, J M, “Shareholder Wealth Effects of the Ohio Anti-takeover Law” (1988) 4 J Law, Economics and OrganizationGoogle Scholar; Note, “Sword or Shield: The Impact of Third Generation State Takeover Statutes on Shareholder Wealth” (1989) 57 George Washington L Rev 958.

¹⁶⁴ Pugh, W N and JS, Jahera, “State Anti-takeover Legislation and Shareholder Wealth (1990) J Financial Research 221CrossRefGoogle Scholar.

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¹⁶⁶ For a definition of externalities, see supra n 41. See also R, Romano, “The Future of Hostile Takeovers: Legislation and Public Opinion” (1988) 57 Cincinnati L Rev 457Google Scholar.

¹⁶⁷ P, Blazey, Bolte: A Political Biography (1972) 226Google Scholar.

¹⁶⁸ Id. This claim was investigated by the Federal Parliament's Senate Standing Committee on Industry and Trade which found that foreign ownership in TNT at that time could have been at least 34 per cent: The Proposed Takeover of Ansett Transport Industries Ltd by Thomas Nationwide Transport Ltd (1972) 3-5.

¹⁶⁹ P Blazey, supra n 167, 227.

¹⁷⁰ Select Committee (Ansell Transpon Industries) Act 1972, ss 5 and 6.

¹⁷¹ In fact, there is no clear indication in the Parliamentary Debates concerning the merits of the Act and only vague references to the importance of Ansett to the economy of Victoria: Parliamentary Debates of the Legislative Assembly, 26 April 1972, 5368-5369.

¹⁷² Subsequent takeover offers by TNT for the shares of Ansett are referred to in Thomas Nationwuk Transport Ltd v National Companies and Securities Commission (1986) 11 ACLR 59.

¹⁷³ for an interesting expos1t1on of the rhetoric of economic terminology, see McCloskey, D N, “The Rhetoric of Law and Economics” (1988) 86 Michigan L Rev 752CrossRefGoogle Scholar.

¹⁷⁴ See eg R K Winter, supra n 72.

¹⁷⁵ RA, Posner, Economic Analysis of Law (3rd ed 1986) 12Google Scholar.

¹⁷⁶ RM, Dworkin, “Is Wealth a Value?” (1980) 9 J Legal Studies 191, 193Google Scholar.

¹⁷⁷ AT, Kronman, “Wealth Maximization as a Normative Principle” (1980) 9 J Legal Studies 227, 235Google Scholar.

¹⁷⁸ Ibid 235-236.

¹⁷⁹ Ibid 236. The Kaldor-Hicks concept of efficiency is that employed by R A Posner, supra n 175, 13.

¹⁸⁰ Margolis, S E, “Two Definitions of Efficiency in Law and Economics” (1987) 16 J Legal Studies 471CrossRefGoogle Scholar.

¹⁸¹ L, Cohen, “A Justification of Social Wealth Maximization as a Rights-Based Ethical Theory” (1987) 10 Harv J Law & Pub Pol 411Google Scholar.

¹⁸² RA Posner, supra n 175, 241.

¹⁸³ Medema, S G, “Discourse and the Institutional Approach to Law and Economics: Factors That Separate the Institutional Approach to Law and Economics From Alternative Approaches” (1989) 23 J Eco Issues 417, 419-20CrossRefGoogle Scholar. See also Samuels, W J and N, Mercuro, “Wealth Maximization and Judicial Decision-Making: The Issues Further Clarified” (1986) 6 Intl Law & Eco 133CrossRefGoogle Scholar.

¹⁸⁴ See “Symposium on Efficiency as a Legal Concern” (1980) 8 Hofstra L Rev 485 and “A Response to the Efficiency Symposium” (1980) 8 Hofstra L Rev 811.

¹⁸⁵ M, Kelman, “On Democracy-Bashing: A Skeptical Look at the Theoretical and 'Empirical' Practice of the Public Choice Movement” (1988) 74 Virg L Rev 199, 226Google Scholar.

¹⁸⁶ D, Kennedy, “Cost-Benefit Analysis of Entitlement Problems: A Critique” (1981) 33 Stanford L Rev 387Google Scholar.

¹⁸⁷ CE, Baker, “The Ideology of the Economic Analysis of Law” (1975) 5 Philosophy & Pub Aff 3Google Scholar.

¹⁸⁸ GT, Schwartz, “Economics, Wealth Distribution, and Justice” [1979) Wisconsin L Rev 799Google Scholar.

¹⁸⁹ DB, Johnsen, “Wealth is Value” (1986) 15 J Legal Studies 263Google Scholar.

¹⁹⁰ J, Waldron, “Criticizing the Economic Analysis of Law” (1990) 99 Yale L J 1441, 1460Google Scholar.

¹⁹¹ RA, Posner, “The Value of Wealth: A Comment on Dworkin and Kronrnan” (1980) 9 J Legal Studies 243Google Scholar; RA, Posner, “A Reply to Some Recent Criticisms of the Efficiency Theory of the Common Law” (1981) 9 Hofstra L Rev 775Google Scholar.

¹⁹² RA Posner, supra n 175, 25-26.

¹⁹³ It is imponant to draw a distinction between positive economic analysis (to explain what is) and normative economic analysis (to argue what should be). Thus, the sentence in the text that Parliament should endeavour to make company law efficient uses the term “efficient” in a normative sense. On the other hand, the empirical studies which show that cenain corporate actions have certain effects on the share prices of the companies affected are examples of positive economic analysis. It has been said that the distinction between positive and normative “is a distinction lawyers have difficulty getting straight because they are inveterately normative”: RA, Posner, “Some Uses and Abuses of Economics in Law” (1979) 46 U Chicago L Rev 281, 285Google Scholar.

¹⁹⁴ For a few recent contributions, see DJ, Morrissey, “Toward a New/Old Theory of Corporate Social Responsibility” (1989) 40 Syracuse L Rev 1005Google Scholar; J, Nesteruk, “Corporations, Shareholders, and Moral Choice: A New Perspective on Corporate Social Responsibility” (1989) 58 Cincinnati L Rev 451Google Scholar and HJ, Glasbeek, “The Corporate Social Responsibility Movement - The Latest in Maginot Lines to Save Capitalism” (1988) 11 Dalhousie L J 363Google Scholar.

¹⁹⁵ R, Romano, “Metapolitics and Corporate Law Reform” (1984) 36 Stanford L Rev 923Google Scholar.

¹⁹⁶ H N Butler, supra n 78,99.

¹⁹⁷ Ibid 123.

¹⁹⁸ R Nader, M Green and J Seligman, supra n 66, 7, 71.

¹⁹⁹ See generally, DE, Schwartz, “A Case for Federal Chartering of Corporations” (1976) 31 Bus Lawyer 1125Google Scholar.

²⁰⁰ Eg one question of current interest is whether institutional investors should be more active in concerning themselves with the companies in which they invest, a debate addressed in L Lowenstein, What's Wrong With Wall Street (1988). Does the answer to this question turn on personal views concerning whether these institutional investors should be just maximising the returns to their own investors or fulfilling a more public function with respect to the companies in which they invest'?

²⁰¹ Supra text at nn 55-66.

²⁰² Explanatory Memorandum, para 11.

²⁰³ Easterbrook, F H, “Anti-trust and the Economics of Federalism” (1983) 26 J Law & Eco 23, 34CrossRefGoogle Scholar.

²⁰⁴ Explanatory Memorandum, para 6.

²⁰⁵ R Romano, supra n 119, 240.

²⁰⁶ 206 R Romano, supra n 166, 468-470.

²⁰⁷ Supra M 70, 71, 102-114.