The one constant in corporate governance is that governments around the world keep moving the goalposts.

In the United States, Congress enacted big shifts with Sarbanes-Oxley, the Dodd-Frank Act, and most recently, the JOBS Act. So here we are about four months away from a U.S. presidential election and the natural question is: Will the results affect how Washington treats companies and investors? Should we all brace for yet another compliance shakeup?

Before we weigh potential outcomes, let's look for hints at where things are heading in a review of events abroad and in our own political history. In Europe, recession and serial debt crises have stoked public dismay with capital markets. In response, politicians have opened up new policy fronts in corporate governance. Britain's center-right coalition unveiled elaborate legislation last month that will make certain “say-on-pay” votes binding. Apparently, lawmakers deemed the “shareholder spring” uprising against compensation at six British companies too feeble when stacked against public anger at rising CEO pay during an era of austerity. Business interests, ironically, are grateful that proposals were not more draconian and are actually welcoming the measures. France's new president, Francois Hollande­backed by a new socialist majority­ is also floating the idea of binding votes on executive pay and absolute caps on CEO salaries in the banking sector. 

But Europe isn't only obsessed with compensation. The European Commission is increasingly sympathetic to imposing quotas for women on boards of directors—an approach already adopted by Norway, France, and other markets. It is mulling regulation of proxy advisers (so is Canada). It is particularly drawn to requiring new corporate reporting on environmental, social and governance (ESG) risks. The Rio+20 summit last month saw EU delegations push other markets toward more standardized sustainability reporting. As a start, Britain next year will require all companies listed on the London Stock Exchange to disclose greenhouse gas emissions. The European Commission has also allocated funds to stimulate investor attention to ESG behavior at listed companies. And expect fresh scandals in banking, such as those at Barclays and the London unit of JPMorgan Chase, to re-open debate on how to make boards more attentive to financial risk.

Governments in other parts of the world are also pushing out measures affecting boards and investors. Australian regulators, for example, recently issued tough new disclosure and governance standards for institutional investors, partly to stimulate more engagement with corporations.

Beyond the flurry of public policies lies a surprising lesson: Intervention on corporate governance crosses party lines. Authors of corporate-governance-related legislation have included conservatives, socialist, and centrists. In each case, the driver was public outrage.

But is political flexibility peculiar to overseas markets? Not necessarily. While Democrats have cultivated a reputation as corporate governance reformers, their colleagues on the other side of the aisle have also instituted plenty of reforms. Consider that it was none other than the Reagan administration's Department of Labor that issued the famous 1988 Avon letter, which mandated fund voting for pension funds ­and triggered the rise of proxy voting agencies. Remember, too, that Michael Oxley of Sarbanes-Oxley fame was a hard conservative in a Republican-run House of Representatives and that William Donaldson, an advocate of proxy access, was named to chair the Securities and Exchange Commission by George W. Bush. The truth is that the United States, like Europe, has a rich history of action in corporate governance by both of our major political parties. 

Our guess is that even if fresh scandals stir public anger at corporations, neither Obama nor Romney would come to office next January with any urgent appetite for more corporate governance legislation; nor do their constituencies appear poised to clamor for it.

Of course today, at least on the surface, it might appear that politics have irretrievably split Democrats from Republicans on corporate governance issues. Indeed, lawmakers seemed to migrate to extremes toward the end of the Bush administration. The Dodd-Frank Act was born from that polarization and passed on party-line votes in both houses. And the SEC in the Obama era has cast multiple controversial votes, including on proxy access which passed by a 3-2 vote along party lines even though it was never implemented.

Dig deeper, though, and another message emerges. Going into the Dodd-Frank legislative process, investor advocates enjoyed unprecedented influence at the White House and among the top leadership in Congress. That sway made them confident of winning an ambitious wish list of reforms, such as mandatory majority voting, proxy access, and even required independent chairs of corporate boards, as well as a raft of disclosure requirements. Much of that agenda was in Senator Charles Schumer's May 2009 “Shareholder Bill of Rights.” At the same time, however, the U.S. Chamber of Commerce and Business Roundtable were equally confident that they could muster the votes to block most of those measures.

What happened, of course, was a messy and polarized outcome. Investors won on access, but discovered the price was losing on much else, even if many of the disclosure requirements they sought ended up getting adopted. Even that narrow access victory proved hollow: The SEC rule was later rejected by a federal court on technical grounds. But the Chamber got burned, too. It had not expected to suffer legislative defeat on access. Mounting a court challenge was always Plan B.

What November Means

So should we conclude that corporate governance is now partisan? That an Obama re-election in November means a revival of pro-shareholder policies? Or that a Romney win means efforts to restore management supremacy?

Actually, no. Dodd-Frank, ironically, soured shareholder enthusiasm for legislation; advocates found that even a surfeit of clout could deliver only some of the reforms they desired and even that came at high risk of opponents inserting counter-measures. The investor community is simply not unified or resourced enough to play an ongoing, hardball Washington game of shaping legislation. That's why they got so outmaneuvered on the JOBS Act.

Investors have also reached a frustration point with regulation. Neither the SEC nor the Department of Labor has moved as strongly as investors expected to advance shareholder interests. But business interests, even though far better equipped to handle Washington, are also skittish about using law to address corporate governance. Though they got the JOBS Act to trim coverage of Sarbanes-Oxley and Dodd-Frank for smaller, newer companies, they recognize that lawmaking is by nature a Pandora's Box.

In other words, business and investor interests have fought to something like an exhausted stalemate.  There seems a mutual erosion of trust in government to function as a useful arbitrator in this debate—marking a difference from Europe. Our guess is that even if fresh scandals stir public anger at corporations, neither Obama nor Romney would come to office next January with any urgent appetite for more corporate governance legislation; nor do their constituencies appear poised to clamor for it.

Instead, we predict there will be rising interest in market-based alternatives, such as investor-corporate dialogues or even negotiation of a national, authoritative corporate governance code—even on items high on European governments' agenda such as board diversity, CEO pay, and integrated reporting. So goalposts may still move after the presidential election—but maybe more by the hand of the market than any pronouncement from Washington.