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Full-Text Articles in Law
Beyond Shareholder Value: Normative Standards For Sustainable Corporate Governance, Robert Sprague
Beyond Shareholder Value: Normative Standards For Sustainable Corporate Governance, Robert Sprague
Robert Sprague
This paper explores whether the modern corporate governance model is sustainable. For many, particularly large, corporations, there is a separation between ownership and management, with an emphasis by management on short-term gains at the expense of long-term sustainability. This paper explores the role of corporate directors, particularly vis-à-vis shareholders, from an interdisciplinary perspective, analyzing legal case law as well as legal, management, and finance literature. This paper then explores emerging trends in expanding notions of corporate governance that incorporate concerns beyond just shareholders, recognizing the interrelationship between business and society. It is suggested that in order to remain viable and …
Shareholder Primacy And The Business Judgment Rule: Arguments For Expanded Corporate Democracy, Robert Sprague, Aaron Lyttle
Shareholder Primacy And The Business Judgment Rule: Arguments For Expanded Corporate Democracy, Robert Sprague, Aaron Lyttle
Robert Sprague
There is a fundamental flaw in the law’s approach to corporate governance. While shareholder primacy is a well-established norm within U.S. corporate law, the business judgment rule essentially holds directors blameless when they fail to maximize shareholder wealth. During the past century, control of the corporation has passed from shareholders to managers. As a result, shareholders have little practical say in who runs the corporation, even though they cannot usually hold managers legally liable when those managers destroy shareholder wealth through incompetence. Despite a number of arguments asserting that shareholders do not deserve any additional management powers, this article concludes …