Since the 1990s, The Economic Consequences of Legal Origins has become one of the most discussed research fields in corporate governance. Introduced in the landmark article by La Porta et al. (LLSV), this new method of empirically measuring the economic consequences of corporate governance rules promised to give completely new tools for research, investment, and rulemaking. As with all start-ups, conceptual difficulties, operational flaws, and stiff resistance by established players arose. In the meantime, however, much was improved, and the indices and metrics (leximetrics) that were developed on the basis of this empirical research gained enormous influence. Yet the criticism continued. Some criticism was inherently concerned with how to improve the methods; other criticism was fundamental and claimed either a schism between economists and lawyers or between America and the old continent. Of course, the latter schism must be (1) studied against the backdrop of fundamental methodological controversies (which are always the most bitter); (2) seen in light of the vast divide between this new world and the old dogmas still predominant in continental European law; and (3) understood as a reaction to the empirical results that placed Anglo-American law in a preeminent position while disadvantaging continental Europe (and particularly France and other Roman legal orders), which many considered not only wrong but unfair.

Against this backdrop, Bebchuk and Hamdani’s article is a great contribution that may help to bridge the gaps mentioned. The article may also open up a new legal and politics-of-law discourse between the disciplines as well as between the old and new worlds. This is true for two reasons. First, the authors reveal basic shortcomings of the leading American metrics—the corporate governance quotient, the anti-director rights index, and the anti–self dealing index—because they neglect to account for differences in shareholder structures—companies with (CS companies) and without (NCS companies) a controlling shareholder. Second, the attempt to empirically discover economic consequences of legal origin is not denigrated; rather Bebchuk and Hamdani emphasize improving the methodology and using more objective criteria for the comparative evaluation of corporations and countries. While comparative law has long sought to do this, its methodology has been inherently elective and subjective since standards of good corporate governance vary considerably among scholars, practitioners, and countries. If, however, a valid link back to empirical data of the enterprises and financial markets can be established, this is a great step forward for research and practice. Ultimately, it fosters competition, not only among enterprises but also among countries and their rulemakers and legislators. Such competition is the driver of progress. Insofar as competition is concerned, Bebchuk and Hamdani are right in saying that their analysis has “wide-ranging implications for corporate-governance research and practice.”

Bebchuk and Hamdani consider mainly American literature. Yet the index approach has had a considerable impact on the European discussion as well. Some papers have taken a primarily critical approach; others, however, have refined it by adjusting the methodology, taking into account European and worldwide experiences, or even developing new quantitative indices and methods on their own. Greater dialogue among American scholars in both economics and law could be fruitful for both disciplines. The following observations on the relevance of three basic principal-agent conflicts (1) under different shareholder structures and (2) to criteria of shareholder protection under different shareholder structures should therefore be understood as coming from a comparative European perspective and with full respect for the demanding work of the index community.