Question

Senator Elizabeth Warren suggested that the institution of codetermination should be brought to US corporations. Explain in detail how that impacts US corporations?

Answer 1

Co-determination impacts US corporations in the following ways :

• In US role of collective bargaining in its economy is much smaller so co-determination is of no use .

• Some of indisputable costs of co-determination must be much higher in US than any other country.

• Co-determination might undermine the ability of boards to monitor the managers effectively and also Make removing directors more difficult.

• Co-determination inhibits the market for corporate control and corporate risk taking which are historically and economically more important in US.

• Co-determination does not sits well with the US bankruptcy law Concept of "debtor in possession".

• Co-determination would necessitate enacting many mandatory corporate law rules to prevent regulatory arbitrage , thereby undermining the current enabling structure of US corporate law.

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