The Top Five ECGI Law Working Papers of 2025

In 2025, corporate law became a focal point for broader societal tensions: conflicts over sustainability, renewed scrutiny of governing doctrines, and growing unease with the tools used to evaluate corporate behaviour. Engagement with the ECGI Law Working Papers reflected this moment, concentrating on scholarship that challenged established assumptions—about the neutrality of shareholder primacy, the reliability of Tobin’s Q, and the effectiveness of traditional oversight mechanisms in a globalised regulatory landscape.

The papers highlighted here map the contours of that shift (the ranking reflects the best-performing papers in the ECGI Law Series, determined using click-rate analytics and platform engagement statistics). They show how new regulatory models are reshaping corporate obligations, how courts are being drawn into political terrain, and how alternative governance structures are gaining traction.

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Top 5 Law Working Papers of 2025

1. How the EU Sustainability Due Diligence Directive Could Reshape Corporate America - Law Working Paper N° 817/2025 

Luca Enriques, Matteo Gatti & Roy Shapira 

The most-engaged law paper of the year examines how the EU’s Corporate Sustainability Due Diligence Directive (CS3D) is poised to reshape U.S. corporate governance by turning human-rights and environmental risks into mandatory compliance obligations rather than discretionary CSR choices. 

The authors show that the Directive’s broad, process-based duties—extending across global subsidiaries, suppliers, and distributors—combined with strict enforcement and potential sanctions of up to 5% of global turnover, will apply to most large American multinationals. Crucially, once these obligations intersect with U.S. fiduciary-duty doctrine, especially Caremark oversight liability, boards must treat sustainability risks as mission-critical, install robust monitoring systems, and respond to red flags or face heightened litigation exposure. This “CS3D–Caremark combination” strengthens the Brussels Effect by exporting EU sustainability norms into global production processes, reducing the scope for cosmetic compliance and reshaping incentives, supply-chain governance, and legal risk for U.S. firms worldwide.

2. The Legitimation of Shareholder Primacy - Law Working No. 826/2025

Ann M. Lipton 

In a year marked by political polarisation, Lipton’s paper resonated strongly by showing how shareholder primacy—long defended as a neutral, technocratic constraint on managerial power—has itself become a source of politicisation. The analysis argues that Delaware’s corporate law, traditionally legitimised through its apolitical commitment to shareholder welfare, is now strained by the need both to enforce procedural discipline and to maintain the appearance of prosocial corporate behaviour. 

This tension is crystallised in the Tesla compensation case, where enforcing governance formalities required overriding the preferences of shareholders who had benefited enormously from Musk’s leadership, exposing the doctrine’s inability to remain value-neutral. The paper suggests that as societal expectations re-enter corporate decision-making and courts are pushed into allocative judgments, the legitimacy of Delaware’s model weakens, increasing the likelihood of political contestation, jurisdictional flight, and renewed calls for external regulation. 

3. Corporate Governance and Firm Value - Law Working Paper No. 824/2025

Emiliano Catan & Marcel Kahan

This paper struck a strong methodological chord. It argues that the widespread use of Tobin’s Q regressions to assess the long-term effects of corporate governance reforms is fundamentally misguided: Q does not track firm value but blends returns with profit timing and capital-market flows, producing noise and bias that obscure, and can even invert, true treatment effects. 

The authors show that within-firm Q designs simply contaminate return data, while cross-sectional Q comparisons cannot recover historical shocks, rendering decades of influential Q-based findings unreliable. By contrast, long-term return studies—though imperfect—remain theoretically coherent and empirically superior. The paper’s central implication is unequivocal: Q regressions should no longer be used or published in corporate-governance research, and past conclusions derived from them warrant re-examination.

4. Purpose and Nonprofit Enterprise - Law Working Paper No. 819/2024

Cathy Hwang & Dorothy S. Lund

Why do nonprofit enterprises—firms that operate commercially but are controlled by nonprofits—thrive across industries such as AI research, healthcare, software, and cultural production? The paper argues that their success cannot be explained by classic contract-failure theory, which assumed nonprofits prevail only where consumers struggle to judge quality. Instead, these organisations prosper because a credible, non-distributive purpose can substitute for shareholder oversight, mitigating agency costs by giving management clearer direction, strengthening intrinsic motivation, and empowering stakeholders to enforce mission. 

By removing profit-seeking shareholders, nonprofit enterprises also gain strategic stability, insulating long-term goals from short-term market pressure. This “purposeful enterprise” theory explains the rise of nonprofit businesses, enterprise foundations, and insulated benefit corporations, challenging the belief that shareholder primacy is the only efficient governance model. 

5. The Proxy Voting Choice Revolution - Law Working Paper No. 875/2025

Alon Brav, Tao Li, Dorothy S. Lund & Zikui Pan 

Rounding out the year’s top set, this paper examines how the rapid expansion of proxy voting choice is transforming corporate governance by diffusing the Big Three’s concentrated voting power while introducing new and underappreciated risks. Using the first empirical analysis of Vanguard’s pilot, it finds that although participation is still modest, investors predominantly select pro-management policies, meaning that broad adoption would likely reinforce managerial control rather than empower activists or ESG proponents. 

The authors argue that these patterns reflect structural constraints: rationally apathetic retail investors limit the complexity of policy menus; asset managers lack financial incentives to build or monitor high-quality programs; and proxy-advisor guideline providers face weak accountability. Poorly designed programs could fragment voting outcomes, dilute stewardship quality, and shift influence to inadequately incentivised intermediaries, while well-calibrated systems—anchored in thoughtful defaults and stronger disclosure—could enhance investor voice without undermining existing governance efficiencies. 

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These papers capture a legal landscape in transition, one in which regulatory reach, methodological clarity, and governance purpose are being renegotiated in real time. As these pressures intensify in 2026, the Law Series will remain a vital lens on how corporate governance adapts—and where it may need to be rebuilt.

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To discover the Top 5 Finance Working Papers of 2025, click here.