A high profile public debate is taking place over one of the oldest questions in corporate law, namely, “For whom is the corporation managed?” In addition to legal academics and lawyers, high profile business leaders and business school professors have entered the fray and politicians have offered legislative “fixes” for the “problem of shareholder primacy.” In this article, I take this debate
to be an interesting development in corporate governance and try to understand and explain what is going on. I argue that, analytically and conceptually, there are four separate questions being asked. First, what is the best theory of the legal form we call “the corporation”? Second, how should academic finance understand the properties of the legal form when building models or engaging in empirical research? Third, what are good management strategies for building valuable firms? And, finally, what are the social roles and obligations of large publicly traded firms? I argue that populist pressures that emerged from the financial crisis, combined with political dysfunction, have led to the confusion of these different questions, with regrettable results.
In his critique of the legal aspects of my book Prosperity: Better Business Makes the Greater Good, Paul Davies raises five objections. These are: (a) the...
Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United...
Only rarely does the United States Supreme Court hear a case with fundamental implications for corporate law. In Carney v. Adams, however, the Supreme...
One of the oldest corporate law issues – for whom is the corporation managed? – has become one of the hottest public policy issues of corporate law. The...