AS I HAVE DONE for the past several years, I spent the month of August at my home in the south of France where I live in a community made up largely of Europeans, mainly French. Although they disagree, often vociferously, with American foreign policy (in particular the Iraqi war), my neighbors are quick to point out that they like--and they often use the word "love"--Americans. Many of them are top European businessmen who appreciate and admire the American way of doing business, which notably includes our corporate governance principles and practices.
Like the United States, Europe has been rocked by corporate scandals such as the political and legal furor that has engulfed the board of Parmalat. In response, European businesspeople and policymakers are increasingly turning to the U.S. for guidance on how to bring about better corporate control and oversight. Although they may not agree with American leadership in foreign affairs, by and large they see us offering strong leadership in the field of corporate governance, and they have been adopting some of our legislative approaches and many of our management practices.
A single model of corporate governance most likely will not be universally applied. There are some fundamental differences not only between the U.S. and Europe but also within Europe itself. Differences in board structure and composition, such as Germany's two-tier board system, account for much of the variations in corporate governance across Europe. Furthermore, the U.S. and Europe have historically taken different approaches to corporate governance. The U.S. has generally taken a legislative...