The Race to the Bottom as a Between-Level Selection Failure: Listing-Standards Competition, Governance as Extended Phenotype, and the Coalition Behind the Trust Argument

The International Corporate Governance Network argues that recent listing-regime reforms in the United Kingdom, Italy, and the United States weaken investor protection in pursuit of more listings, and that public markets compete on trust rather than on lax standards (Sisson and Brejdak, 2026). I accept the diagnosis and reject the mechanism. Drawing on Extended Phenotype Theory and multilevel selection, I reframe the race to the bottom in listing standards as a between-level selection failure: selection among venues for listings, a lower-level process, defeats selection of the public-market category for trust, a higher-level process, once the constraint coupling the two levels weakens. I argue that the relaxation equilibrium is evolutionarily stable, sustained by payoff structure rather than by error, which yields the prediction that downward reforms revert or fail to deliver liquidity only under an exogenous payoff shock, not under persuasion. I treat governance rules as the extended phenotype of investor coalitions, with the information-asymmetry, liquidity, and stewardship channels operating as mechanisms of differential fitness rather than as regulatory burden. The declared-versus-instantiated distinction explains the Brazilian post-2019 underperformance and the Deliveroo and WeWork cases as boundary crossings where privatemarket admissibility, tolerant of founder asymmetry, meets public-market adjudication. Applying the four-component Constitutional Lock-in Index to Korean corporate governance yields a provisional score near 0.34, in the reformable band, consistent with reform by ordinary commercial legislation during the 2024 to 2025 political crisis, and consistent with the semiconductor cycle, not governance reform, driving the re-rating. I then locate the limit of the trust argument: trust is not a system optimum but the optimum of the institutional-investor coalition that authors the case, since opacity is adaptive for founder and controller coalitions. The analysis preserves the falsifiability of the lock-in instrument by keeping selection neutral as to which coalition prevails. The policy implication diverges from the memorandum: venues cannot be persuaded out of a stable equilibrium; only a change in payoffs moves them. Keywords: corporate governance; listing standards; multilevel selection; extended phenotype; evolutionarily stable strategy; Constitutional Lock-in Index; regulatory competition; minority shareholder protection. JEL classification: G34, G18, K22, B52, P16. This record is part of the Law as Extended Phenotype research program.