30 Jun Corporate governance and board accountability in multinational corporations: a comparative analysis of the U.S and the U.K./EU

Alexia Rossi

Law, Bocconi University, Milano, Italy

E-mail: alexia.rossi@studbocconi.it

Abstract

This paper focuses on the effect that corporate governance regulations have on the accountability of multinational corporation (MNC) board members. To assess the different corporate governance regulations and enforcement mechanisms in the United States and the United Kingdom/European Union, this paper analyses the ways these systems can impact corporate leaders’ accountability. Based on statutes, case law, and academic literature, I will argue that regulatory tightening (e.g. the US Sarbanes-Oxley Act) does make accountability formalized; however, it can produce unintended risk aversion in the boardroom and can also create regulatory fatigue. On the other hand, the more general, flexible, principles-based UK/EU approach does allow for flexibility but does not offer the same enforcement mechanisms. In the end, a unified approach that preserves the legal regulation of the U.S. system, combined with the institutional flexibility of the U.K./EU model, is proposed.

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Keywords: corporate governance, board accountability, multinational corporations