Sky Blog
The past six months have been marked by a profound upheaval that has accelerated the growing focus on both the purpose of the corporation and the role of the board in overseeing and leading the corporation in ways that promote …
Companies will not survive Covid-19 unless they communicate with their stakeholders. As the world around them transforms, corporate leaders must welcome input from those on the front lines of corporate activity – primarily employees and consumers, but also local communities, …
As directors and shareholders become increasingly attuned to ESG considerations and stakeholder-oriented governance, they have sought guidance about how to incorporate these imperatives into the board’s decision-making process—particularly regarding decisions that entail trade-offs or an allocation of resources between and …
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 …
Fifty years ago this year, Milton Friedman, later to be a Nobel laureate in economics, famously argued that corporate governance should focus solely on shareholder value maximization, while conforming to applicable laws and regulations. That view was controversial then. After …
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, …
The ever-evolving challenges facing corporate boards prompt periodic updates to a snapshot of what is expected from the board of directors of a public company—not just the legal rules, or the principles published by institutional investors and various corporate and …
In a recent article[1] I explore the history of the law of corporate purpose, a subject recently highlighted by the Business Roundtable’s “Statement of the Purpose of a Corporation.” This August 19 statement was signed by more than 180 …
The Business Roundtable’s recent call for a commitment to long-term sustainable economic value creation has prompted a vigorous debate about the optimal corporate governance model for achieving that goal.
Certain familiar arguments have reappeared in reaction to the Business Roundtable’s …
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 …
Advances in information technology have revolutionized the dissemination and acquisition of firm-specific information, allowing investors and other stakeholders to quickly assess firm performance and value and monitor management effectively. Our research examines the impact of information technology on the ability …
There are many sources of information about corporate operations, but one of the most critical is the disclosure required by the federal securities laws. Whenever a company seeks to raise capital through the public sale of securities, the U.S. Securities …
Women are starkly underrepresented on corporate boards and more generally in leadership positions. Hillary Clinton’s U.S. presidential campaign and movements like #MeToo have recently attracted lots of attention to gender equality issues. As a result, biases, stereotypes, and female under-representation …
Pay disparity between executives and employees has been criticized as evidence of corporate greed. It can also create perceptions of unfairness and dissatisfaction among employees, weakening their commitment and performance. To provide more information about pay disparity, the U.S. Congress …
Corporate bankruptcy law is built around the idea of replicating the hypothetical bargain that would occur among creditors of a firm if they could all negotiate ex ante. By the common account, the creditors in that bargain would agree on …
Whether the purpose of the corporation is to generate profits for its shareholders or to operate in the interests of all of its stakeholders has been actively debated since 1932, when it was the subject of dueling law review articles …
BlackRock, the vast asset manager, has been feted for demanding that the boards of its portfolio firms pursue a social purpose, which likely entails spreading corporate profits beyond shareholders to include labor and victims of environmental harm.[1] But despite …
A key principle of financial reporting is that “information should be expressed so that substance, not form, governs” [1]. What this means is that “the financial statements and accompanying disclosures of a business should reflect the underlying realities of business …
Corporate governance has traditionally been viewed as a way to reduce agency costs between shareholders and managers in the context of private ordering. Laws and regulations pertaining to corporate governance have, therefore, typically aimed to enhance long-term wealth for shareholders.…