Corporate Opportunities Doctrines Tested in the Light of the Theory of the Firm – a European (and US) Comparative Perspective’

Abstract:

Corporate opportunities doctrines originated in Anglo-American law and were subsequently adopted by several continental European jurisdictions. The tests adopted for identifying corporate opportunities have important strategic consequences for a company, both from a law and finance and from an industrial perspective.

This article analyses the connections between several versions of the theory of the firm and of corporate opportunities doctrines. It finds an increasing degree of convergence of different jurisdictions towards a test for identifying ‘corporate opportunities’ that is based either on a company’s ‘line of business ’ or on a company’s ‘interest’.

Both tests seem to be inspired not only by the economic agency theory, as explained by law and finance scholars, but also by the objective of protecting a company’s specific investments, as described by Oliver Williamson. The objectives of containing both agency and hold-up costs seem to coexist in all the jurisdictions that are the objects of the present analysis, which foresees an intensification of the highlighted convergence.