Why the Campaign Against Corporate Personhood Is Misguided

Considerable controversy has surrounded the Supreme Court’s sharply divided decisions in Citizens United and Hobby Lobby. Critics argue that giving business corporations unwarranted constitutional protections entrenches corporate power at the expense of democracy by putting legal fictions on the same political plane as human beings. The powerful intuitions and normative concerns underpinning these objections are captured in familiar slogans, such as “End Corporate Rule,” “Corporations Are Not People,” and “We the People, Not We the Corporations.”

Rallying around such catchphrases is a broad social movement demanding that rights be restricted to human beings and corporate personhood be abolished (see … Read more

Ernst Freund as Precursor of the Rational Study of Corporate Law

It is now widely recognized that legal entity status fulfills important economic functions by separating a firm’s business assets and the personal assets of its founders, directors, or shareholders, and that this separation is stronger in corporations than in partnerships (Hansmann et al. 2006). Corporate assets are controlled by an independent board and are literally locked in, in the sense that neither firm founders nor subsequent shareholders can withdraw all or part of their equity shares or force a partial liquidation to satisfy the claims of their personal creditors. This institutional arrangement, which cannot be achieved by contract alone, mitigates … Read more