Sky Blog
We are living in a particularly polarized era, and corporate governance is no exception. The divisions have threatened to spill over to Delaware, the preferred jurisdiction for incorporation in the United States, with several high-profile cases calling the state’s neutrality …
Can we speak of a “purpose” for corporations or, more broadly, corporate law? The doctrine of shareholder primacy has long had an easy answer: Both individual corporations and corporate law should strive to maximize shareholder wealth. But this reductive and …
For decades, advocates of “shareholder primacy” as the North Star of corporate governance have steered our leading corporations and our Nation’s economic engine perilously off-course. Since the 1970s, when the work of Milton Friedman, Michael Jensen, and Frank …
What is the purpose of the corporation in society? Whose interests are corporate managers supposed to advance? How can corporate law and governance best promote social welfare? For the past 50 years, most scholars and business leaders would have answered …
In corporate governance circles, the clash between the different philosophies of shareholder primacy and stakeholderism rages on. In a recent article in the Columbia Law Review, Professor Aneil Kovvali challenged what he calls the “stark choice hypothesis,” which suggests …
The debate over the corporation’s purpose is today a central topic of corporate law scholarship. So far, the discussion has advanced little beyond a two-sided view, considering only the approaches known as shareholder primacy and corporate social responsibility (CSR). In …
I recently participated in a festschrift for retired justice (and noted stakeholderist) Leo E. Strine, Jr., hosted by the University of Pennsylvania Journal of Law and Business. Justice Strine’s interventions in the debate over shareholder primacy have added heft, pragmatism, …
The widely accepted primary purpose of corporations is to maximize profit or value to shareholders, otherwise known as “shareholder primacy.” Shareholder primacy represents not only the prevalent objective of corporations but also a norm: A seminal case in corporate law, …
In recent years, interest in alternatives to shareholder-centric corporate governance has increased significantly. It has been driven by a growing sustainability imperative – widespread recognition that business as usual, despite the short-term returns generated, could undermine social and economic stability …
The three primary determinants of economic growth – physical capital growth, human capital growth, and technological innovation – rely on citizens’ confidence that private property rights are secure. Essential to that confidence is the rule of law.
Rule of law …
Over the last few years, the #MeToo and #BlackLivesMatter movements have facilitated a deeper understanding of racial and gender inequality and have, generally speaking, begun to create tangible changes within American life. At the same time, corporations have begun to …
The fundamental question in the law of business organizations – what is the purpose of the corporation? – contains a related question of constituencies and, therefore, priorities among them: Whom does the corporation serve? If, for example, the purpose that …
The most vital and deeply practical argument for more broadly understanding corporate purpose comes from the management literature and the data on how to motivate people in organizations. Put simply, people in organizations do not work as hard or come …
Members of the academic community, the business world, and law firms have long been debating shareholder primacy, stakeholder governance, and corporate purpose. In a forthcoming essay, I outline these arguments but suggest that reform of corporate governance should be focused …
Well before the Covid-19 pandemic, policymakers and scholars were focused on the debate over corporate purpose and the fragility of an economic system marked by stagnation and runaway inequality. As a solution, many urged a shift from shareholder primacy (the …
Purpose is currently one of the hottest topics in corporate governance. Commentators are demanding not only that corporations formally articulate a purpose, but that the corporate purpose embrace the interests of non-shareholder stakeholders or society more generally. In August 2019, …
In an article posted yesterday [March 2] on the Harvard Law School Forum on Corporate Governance blog, Professor Lucian Bebchuk rejects stakeholder governance and, in so doing, attacks the committed positions of influential institutions as varied as the Business Roundtable, …
An important debate has emerged in the United States about how business should encapsulate more fully the sustainability-conscious management paradigm. At issue is the proper role of business in society, and the trend is to consider more than just shareholder …
In a recent opinion piece in the Financial Times[1], Harvard Law School Professor Jesse Fried makes a strong case that the Business Roundtable’s CEOs statement, in which they committed to “lead their companies for the benefit of all …
The stakes for responsible corporate stewardship have never been higher.
Corporations today account for a greater proportion of our collective productivity than ever before. Of the 100 largest economies in the world, 71 are corporations, and only 29 are countries. …