America’s capital markets are the envy of the world but face an existential threat from the meteoric rise of index funds. The problem is a growing erosion of corporate accountability. Last month, President Trump took a first pass at this …

Between 2020 and the first half of 2024, corporations in a variety of industries adopted the language of social and environmental progress. They pledged to diversify their workforces, hired DEI professionals, denounced racial injustice, and announced plans to reduce greenhouse …

Growing concerns about the externalities that companies may impose on stakeholders have placed the mainstream shareholder primacy model under intense scrutiny. Stakeholderism, or stakeholder model, is an alternative approach that requires companies to consider interests beyond those of shareholders, is …

In the debate over whether corporations should give priority to shareholder interests or stakeholder interests, among the thorniest issues is whether one approach creates more value for a company than the other. The challenge lies in the difficulty of assessing …

At a recent Columbia Law School colloquium, participants posed a foundational question: How do corporate law standards of fiduciary duty relate to what scientists call the “climate emergency”?[1]

Unfortunately, under what I will call the Maximization Model of fiduciary …

Corporate success lies at the heart of directors’ duties in many corporate laws, but few of those laws define success.  As a result, there is growing confusion and concern about the objective of the firm.

Some scholars argue that it …

The traditional view of corporate stakeholders is rapidly becoming obsolete in our hyperconnected world. We can no longer neatly categorize people into simple roles as shareholders, employees, or customers. Today’s reality is far more fluid – employees also own the …

In May 2023, the SEC adopted new disclosure rules on company stock buybacks (“New Disclosures”) to help investors better evaluate whether the buybacks serve management’s personal interest at the expense of the company and its shareholders. The New Disclosures would …

Since the 1990s, regulatory reforms worldwide have significantly increased the independence of corporate boards. By 2023, nearly all of the top 50 equity markets had implemented minimum requirements for board or board committee independence. While extensive literature highlights the benefits …

Corporate governance and political governance are increasingly intersecting, as corporations engage in some of the most contentious and important social challenges of our time with their voice, capital, and actions. In a recent article, I examine this new convergence …

Does the rise of artificially intelligent corporations threaten the integrity and legitimacy of democracy? This question looms large as the 2024 presidential election approaches. A growing number of academics, business leaders, and politicians warn that unchecked development and dissemination of …

In the complex world of corporate governance, a novel mechanism has reemerged: board observers. Operating without the conventional voting rights of board members, these individuals have become pivotal in bridging the gap between ambitious startups and their venture capital (VC) …

A fascinating legal soap opera is now underway following a trial just completed in California. The issues are new, novel, and important in one sense, but old, familiar, and important in another. The case – SEC v. Panuwat[1] — …

How do directors add value to corporations, and what are their incentives? They add value through monitoring and advising management – although monitoring seems to have taken precedence in the wake of high-profile financial scandals. As for directors’ incentives, the …

For whom should the corporation be run?  The Business Roundtable proclaims the answer to be “for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.”  Asset managers, both private and public, use their voting power to pressure …

State-owned enterprises (SOEs) can help cause but also solve the climate crisis. A lot depends on the controlling shareholders of SOEs – governments – which wield significant legal and economic power over SOEs’ actions. If we are serious about holding …