The Separation of Corporate Law and Social Welfare

The Separation of Corporate Law and Social Welfare

William Bratton

Series number :

Serial Number: 

Date posted :

June 01 2017

Last revised :

June 13 2017
SSRN Share


  • Corporations • 
  • Bankruptcy • 
  • Corporate Finance • 
  • securities • 
  • Bonds • 
  • financial distress • 
  • Reorganizations • 
  • debt restructuring • 
  • Trust Indenture Act • 
  • Collective Action Clauses • 
  • Unanimous Action Clause • 
  • Creditor Coercion • 
  • Exit Consents • 
  • Intercreditor Duty of Good Faith

A half century ago, corporate legal theory pursued an institutional vision in which corporations and the law that creates them protect people from the ravages of volatile free markets. That vision was challenged on the ground during the 1980s, when corporate legal institutions and market forces came to blows over questions concerning hostile takeovers.

By 1990, it seemed like the institutions had won. But a different picture has emerged as the years have gone by.

It is now clear that the market side really won the battle of the 1980s, succeeding in entering a wedge between corporate law and social welfare. The distance between the welfarist enterprise of a half century ago and the concerns that motivate today’s corporate legal theory has been widening ever since.

This Essay examines the widening gulf. It compares the vision of the corporation and of the role it plays in society that prevailed during the immediate post-war era, before the fulcrum years of the 1980s, with the very different vision we have today, and traces the path we took from there to here. It will close with a brief prediction regarding corporate law’s future.

Published in

Published in: 
Publication Title: 
Washington and Lee Law Review
Vol. 74, p. 767, 2017