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Business Organizations Law

Cornell Law Faculty Publications

Homo economicus

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Articles 1 - 3 of 3

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On The Proper Motives Of Corporate Directors (Or, Why You Don't Want To Invite Homo Economicus To Join Your Board), Lynn A. Stout Jan 2003

On The Proper Motives Of Corporate Directors (Or, Why You Don't Want To Invite Homo Economicus To Join Your Board), Lynn A. Stout

Cornell Law Faculty Publications

One of the most important questions in corporate governance is how directors of public corporations can be motivated to serve the interests of the firm. Directors frequently hold only small stakes in the companies they manage. Moreover, a variety of legal rules and contractual arrangements insulate them from liability for business failures. Why then should we expect them to do a good job?

Conventional corporate scholarship has great difficulty wrestling with this question, in large part because conventional scholarship usually adopts the economist's assumption that directors are rational actors motivated purely by self-interest. This homo economicus model of behavior ...


In Praise Of Procedure: An Economic And Behavioral Defense Of Smith V. Van Gorkom And The Business Judgment Rule, Lynn A. Stout Jan 2002

In Praise Of Procedure: An Economic And Behavioral Defense Of Smith V. Van Gorkom And The Business Judgment Rule, Lynn A. Stout

Cornell Law Faculty Publications

No abstract provided.


The Investor Confidence Game, Lynn A. Stout Jan 2002

The Investor Confidence Game, Lynn A. Stout

Cornell Law Faculty Publications

Academic discussions of securities policy often assume that investors are hyperrational and distrustful actors who do not need the protections of the securities laws to avoid being defrauded. The time has come to recognize the limitations of this assumption and to consider as well the possibility and implications of investor trust. Experienced policymakers and businesspeople (and certainly experienced con artists) have long known that trust is a potent force in explaining and manipulating investor behavior. They are right. They are right to believe that investor confidence-meaning investor trust-is important to the market. They are right to think that trust has ...