In the Iliad and the Odyssey, heroes are only what society says they are. What constrains the likes of Achilles and Odysseus, then, is not fear of the gods or some codified prohibitions, but models of honor and the gaze of others.

In a new article, I argue that American corporations have increasingly become subject to a comparable mode of constraint. Corporate law remains what it has long been: codified prohibitions, adjudicating authorities, and punishment. Alongside it, however, operates a system of social ordering, in which anticipated public judgment does much of the work. I call the resulting structure a guilt-shame model.

Corporate law scholarship has shown, with growing sophistication, that values shape corporate conduct beyond what formal law captures. What is missing is a theory of the judgment itself, with the granularity that classicists and anthropologists have long brought to honor and shame. My article fills that gap.

Two Models of Social Ordering

In a guilt culture, conduct is regulated through codified prohibitions applied by an adjudicating authority, and conscience is internalized. In a shame culture, conduct is measured against aspirational models and assessed by the community; punishment is external. Neither model exists in pure form. The question is which prevails and to what degree.

American corporate law has traditionally been a guilt-culture artifact. Fiduciary duties, securities regulation, and litigation wait for a rule to be broken. Milton Friedman’s doctrine has the same shape: firms maximize profit, and regulation repairs externalities afterward. Resorting to robust external regulation to protect individual investors and other stakeholders locates accountability in law.

The received view is that short of prohibitions, no constraints govern behavior. Technology and the diffusion of social media apps are reversing the trend. Online communities and apps expose corporate conduct to a global audience. The Homeric model of social ordering as well as the Japanese society described by Ruth Benedict supply working concepts to appreciate shame culture.

First, results outweigh intentions. In Homer, the punishment derives from what people say you did. In Benedict’s Japan, a person with jicho forecasts the public verdict before acting.

Second, glory requires conformity. The Greek warrior Achilles’ supremacy in battle did not earn glory (kleos) while he abused the body of his dead enemy, Hector. He earned it only after returning the body for burial. Power without recognized conformity to shared norms yields notoriety, not legitimacy.

Third, shame rewards concealment and deflection. Homeric heroes attributed disgraceful errors to ātē, a divinely induced blindness, relocating fault outside the self. In a shame culture, discovery is itself the injury, and confession cannot undo it.

From Public Judgment to Commitment

The British philosopher John Locke identified three laws: divine law, civil law, and the law of opinion or reputation. He gave the last the greatest force. I argue that this third law reaches corporations through three vectors.

Popularity is momentary approval, fast and volatile. William Cornwallis, writing after the Earl of Essex’s failed rebellion, treated it as a juggler’s trick. A company may be celebrated on Monday and boycotted by Friday with virtually no change in conduct.

Reputation accumulates through observed conduct, is costly to counterfeit and slow to repair. Cornwallis grasped its commercial function: It supplies the credentials that make dealing with strangers possible.

Prestige is the most deceptive. Derived from praestigium, a conjuror’s trick, it operates as status independent of merit. Prestige can shield the undeserving and deny the deserving the benefit of the doubt.

A verdict is not an enforcement mechanism. Activism supplies enforcement, translating judgment rendered in the register of shame into the register of dollars. In Values Primacy & Total Governance Through Activism, written with Carliss Chatman, we treat boycotts, proxy votes and viral campaigns as governance in action. Pressure alone is unstable. Many commitments to diversity, equity, and inclusion made after 2020 proved reversible because they were not treated as  superordinate goals (i.e., objectives that groups in conflict cannot reach alone, such as climate stability or product safety). Where stakeholders pursue such goals structurally and across roles, commitments migrate from external expectations to internal constraints. Values primacy converts a momentary verdict into durable governance.

The Guilt-Shame Model

The model has costs. Popularity rewards visibility over accuracy. Overconfidence and confirmation bias distort crowds. Platforms decide what reaches whom. Prestige launders status into trust. Shame culture lacks due process, proportionality, and a neutral decision-maker. However, shame culture supplies what guilt culture reaches slowly or not at all: continuous, low-cost scrutiny of lawful conduct that betrays professed values.

The guilt-shame model reframes a familiar debate. Shareholder primacy and stakeholderism ask what managers ought to do. This model asks a prior, descriptive question: Which audiences, in what ways, can sanction management choices, whether or not the law requires those choices?

It also resolves an apparent puzzle. Values-based commitments are often unenforceable in court, yet they bind in practice, because a firm that betrays a professed value can suffer rapid reputational and financial consequences even when no law was broken or no fiduciary duty plausibly violated. Such commitments function less as private moral compasses than as continuously renegotiated understandings with the public.

The question for corporate law is no longer whether public opinion governs. It is how to build institutions that help public opinion judge well.

Sergio Alberto Gramitto Ricci is an associate professor of law at Hofstra University’s Maurice A. Deane School of Law. This post is based on his recent article, “Corporate Governance & Public Opinion: A Guilt-Shame Model,” available here.