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In this Article, Professor Skeel argues that the important recent literature exploring historical and political influences on American corporate law has neglected a crucial component of corporate governance: corporate bankruptcy. Only by appreciating the complementary relationship between corporate law and corporate bankruptcy can we understand how corporate governance operates in any given nation. To show this, the Article contrasts American corporate governance with that of Japan and Germany. America's market-driven corporate governance can only function effectively if the bankruptcy framework includes a manager-driven reorganization option. The relational shareholding that characterizes Japanese and German corporate governance, by contrast, requires a much harsher bankruptcy regime. Drawing on recent insights in corporate finance, the Article contends that a permanent change in the corporate governance approach (such as the increase in relational governance in the United States that some commentators have advocated) would lead to a corresponding change in corporate bankruptcy, and vice versa. In order to understand why American corporate governance differs so dramatically from that of Japan and Germany, the Article explores the evolution of corporate governance in the three countries in historical and political terms. Based on an analysis of interest group activity, as well as structural and ideological factors, the Article predicts that corporate governance patterns will remain surprisingly stable in each of the three countries, despite the increasing internationalization of markets.

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Vanderbilt Law Review

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51 Vand. L. Rev. 1325 (1998)