As the Securities and Exchange Commission prepares to hold roundtable discussions on the relationship between proxy rules and state corporation law, it might be worth considering the overall role of the Commission in the corporate governance process.  This is the subject of my recent essay, Corporate Governance, the Securities and Exchange Commission, and the Limits of Disclosure, and a topic that will be discussed at The Race to the Bottom blog.

The Commission has traditionally been viewed as responsible for disclosure, with the substance of corporate governance left to the states, as if the two were distinct.  In adopting the Exchange Act, however, Congress expected disclosure to help reduce certain abusive managerial practices, including self-perpetuation in office and excessive compensation.  (The legislative history, and especially the discussion of disclosure requirements at pages 12-14 of the House Report recommending passage of the Act, make clear that Congress expected disclosure to rein in managerial abuses.)  In other words, from the outset, Congress expected the Commission to be involved in the corporate governance process. 

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