Shareholder Primacy Research Articles

Promethean Business: From Financial Hedonism to Financial Eudaimonia

The story of Prometheus and Pandora serves as an apt analogical device through which to demonstrate the impact that publicly traded corporations, and the shareholder primacy approach to corporate governance has created unintended consequences. Prometheus’s benevolent gift of fire led to the collateral damage of Pandora’s Box unleashing ills on mankind. Similarly, incorporation was a positive development that supported businesses lasting beyond one generation of owners, and led to businesses thriving and creating innovations that improve our lives. However, with these innovations and the related consumption has come a figurative Pandora’s Box of ills to society, including but not limited to widening income inequality, greater personal debt, and environmental degradation. In this critical essay, Greek mythology and classical philosophical approaches to happiness are intertwined with corporate approaches to stakeholder and shareholder optimization.

「株主の株主による株主のための」会社でよいのか。日本型企業統治にもっと目を向けよう。

「株主の株主による株主のための」会社でよいのか。日本型企業統治にもっと目を向けよう。

Battling for the Soul of the Corporate Leader: Ida Tarbell and the Progressive Governance Model

Debating, advocating, and contesting the appropriate role of the large-scale business enterprise in a democratic society has been an ongoing activity since the advent of industrial capitalism. For some, corporate behemoths are fundamentally and irretrievably incongruent with democratic institutions. Others hold out the possibility of responsible behaviors on the part of corporate leaders. The debate over what constitutes responsible behavior is typically conceptualized around a dispute between shareholder primacy and stakeholder plurality. Through an examination of the writings of Ida Tarbell, a leading early 20th century journalist, we explore a progressive option, one that rejects the possibility of moral self-governance and places greater emphasis on how to govern society than on how to govern the corporation. Tarbell is one of the many women whose contribution to the development of management and organization studies has been neglected. She makes for a particularly useful representative figure because of her massive history of one of the first and most significant manifestations of early corporate enterprise: Standard Oil. By analyzing Tarbell’s body of work, we offer a ‘progressive’ paradigm that insists that the question of how to govern the corporation is secondary to the more fundamental question of how to govern society. For Tarbell and her fellow progressives, answering the corporate governance question without addressing the matter of societal governance was futile. Corporations were conceived not as stand-alone institutions but as part of a larger society. No business leader, no matter how well-meaning, would be sufficient to ensure the enhancement of democracy and the stability of open markets, competition, and fairness.

Apple Tax - The Core Issues

The corporation is one of a number of market actors which create value but at the same time can and ought to behave in ways which are economically sustainable. In the context of this paper this means that corporate actions ought to satisfy the economic needs necessary for stable and resilient societies. There is a clear imperative that multinational companies are not governed by an agenda dominated by a notional concept of ‘shareholder primacy’ which will lead to many unsustainable behaviours including the aggressive avoidance of tax liabilities. Whilst the problems associated with the concept of ‘shareholder primacy’ have been well documented, it is entirely plausible that there are other dynamics at play in relation to understanding corporate actions. This paper will address this hypothesis regarding additional motivations when it considers corporate culture. Aggressive avoidance of tax liabilities on the part of multinational corporations has been the focus of considerable work by the OECD reflected in its Report on Base Erosion and Profit Shifting Project (Final Report) 2015.

Inside or Outside the Corporate Law Box? Shareholder Primacy and Corporate Social Responsibility in China

When most of China’s major cities are suffering from smog, people start to cry out for environmental improvement. The significance of Corporate Social Responsibility (CSR) has become one of the hottest topics in China. CSR and shareholder primacy are widely debated idiosyncratic areas of corporate legislation. China’s approach has thus far been unclear in both areas. This paper first considers all related provisions in Chinese commercial law in order to identify China’s approach (law on the books) from the legislative perspective. Then, based on this conclusion of the schizophrenic Chinese corporate law, it further examines the enforcement of shareholder primacy and CSR laws using empirical methods (law in action). Finally, the efficacy of the current approach is analysed and assessed from a political economy perspective. The article concludes that it would be efficient for China to follow existing statutory requirements and imperatives. Moreover, China must correct practitioners’ modus operandi in order to improve the rule of law. Social responsibility issues should, for the time being, be tackled outside the corporate law box rather than by meddling with already confusing director duties.

Economic Democratization in Korea and Governance from a Canadian Versus a U.S. Corporate Law Perspective

대한민국의 경우 연속된 정치적 또는 경제적 위기로 인하여 최상위급 결정권자 차원에서 공적 영역과 사적 영역이 구분되지 않고 있다는 공통의 인식이 더욱 입지를 더해가고 있다. 지배권의 개혁이라는 주제에 대한 가장 기본적인 단서가 미국회사법을 관통하고 있는 모델을 불행하게 패러디한 경제민주화라는 이상론에 집중되어 있다. 개혁을 이야기함에 있어 경제민주화라는 이상으로 인하여 주주권의 범위와 행사를 조정하는 정도를 넘어, 그 이상일 것이 요구된다. 즉 대한민국의 경우 미국회사법상 2가지 가장 중요한 원칙이라 할 수 있는 주인과 대리인모형(principal and agent theory) -즉 주주권을 원칙으로 하는- 및 대안정책팀(alternative team model) 모형 -즉 이사회의 권한을 강화하여 모든 이해관계자의 권한을 조정토록 하는 -이 적절하게 적용되지 못하고 있다. 본고는 이러한 문제에 당하여 대안으로 BCE v. 1976 Debentureholders에서 확인된 2008 캐나다대법원을 판결을 지지하는 이론 등 캐나다회사법을 적극 검토할 것을 제안하려 한다. BCE 사건은 동사건에서 캐나다의 집중주주(concentrated shareholders)의 경우처럼, 한국 재벌들이 이사회가 주주들의 부를 착취하는 것을 못하도록 하여 대리인 비용을 절약할 수 있다는 논리를 지지하는 근거가 될 수 있다. 대한민국법의 경우 이사는 선량한 관리자로서의 주의의무가 있는 바, 이는 BCE 사건에서 확인인 이사의 충실의무와 기능적으로 동일한 것이라 할 수 있다. 이러한 충실의무는 선량한 회사원의 기준에서 회사에게 가장 이익이 되도록 형평과 공정의 이념에 따라 행동함으로써, 회사의 경제적 이익을 증진하여야 할 의무를 말한다. 대한민국 회사의 경우 지배주주 및 기타 주주들간의 이해의 충돌을 최소화하기 위해 이사들의 법적 의무를 발전시키고 실제로 이행되도록 하여야 할 필요가 있을 것이다. 그러나 헌법 제119조2항의 한국경제의 민주화 조항은 제119조1항을 포함하여 시장경제를 지지하고 있는 다른 헌법조항과 균형되게 이해되어야 한다. 즉 민주화를 위한 이사회제도 개혁문제 등에 있어 제2항은 제1항, 즉 원칙적 시장경제 조항에 부차적인 것이라는 학자들의 논의에 귀를 기울일 필요가 있다.In Korea series of major political and economic crises reinforce the common perception that public and private sector interests are intertwined at the highest levels of decision-making power. A main thread of governance reform discourse centers around the idealism of “economic democratization” based on what may be an unfortunate parody of the model dominating U.S. corporate law. Economic democratization should not be limited to adjusting shareholder rights and powers, and the two major theories of corporate law in the United States, the prevalent principal-agent model, supporting shareholder primacy, and the alternative team production model, proposing to empower directors to balance the interests of all residual constituents, do not adequately describe the situation in Korea. This paper proposes instead that greater scholarship be directed to Canadian corporate law, such as the theories that support the holding of BCE Inc. v. 1976 Debentureholders , a 2008 opinion of the Supreme Court of Canada [BCE]. The decision in BCE helps to support the argument that, as with concentrated shareholders in Canada, the heads of Korea’s chaebols may help to reduce agency costs by discouraging directors or managers from expropriating wealth from shareholders. Under Korean law, a director has a duty of care of a good manager, which may be “functionally equivalent” to the fiduciary duty of directors, as confirmed by the BCE Court, to promote the firm’s economic interests, by acting equitably and fairly, in the best interests of the corporation viewed as a good corporate citizen. Minimizing conflicts of interests between controlling and other shareholders in Korean firms may require further development and enforcement of the directors’legal duty of care. However, the democratization of the Korean economy, enshrined in art.1 19-(2) of the Constitution of the Republic of South Korea, must be balanced against the constitutional provisions supporting the market economy, including art.119-(1) of the Constitution, requiring attention to the argument of scholars that art.119-(2) is subordinate to art.119 (1) of the Constitution.

In Search of Lost Time: What If Delaware Had Not Adopted Shareholder Primacy?

The article examines how directors and investors might manage corporations if we did not live in a world of stockholder primacy.

Dismantling the Legal Myth of Shareholder Primacy: The Corporation as a Sustainable Market Actor

The convergence of crises that we face as a global society, with its grand challenge of how to achieve social progress for all without destroying the very basis of our existence, emphasises the importance of discussing the role of the market actors. We cannot achieve environmental, social and economic sustainability of our societies without the contribution of the market actors (businesses, investors, consumers and the public sector in its many roles as market actor). With many difficult questions ahead, there is one thing we know for sure: the ‘business as usual’ path market actors in aggregate are on is not an option for sustainability; it is a very certain path towards a very uncertain future. A fundamental transition away from ‘business as usual’ and onto a sustainable path is necessary. Such a fundamental transition requires sustainable market actors. The paper focuses on what this means for business and more specifically, for the dominant business form of the corporation. In a time where social entrepreneurship in various shapes and sizes receives much (and undoubtedly warranted) attention, whether and how the dominant business form of the corporation fits into a sustainable future also needs to be discussed. This can be rephrased as a question of how to achieve corporate sustainability. The paper begins by discussing the role of the corporation in the unsustainable ‘business as usual’, based on the results of the Sustainable Companies Project (Section II), which shows that the main barrier to corporate sustainability is the social norm of shareholder primacy. This norm has become so dominant that it has turned into a legal myth, and corporate sustainability requires a dismantling of this myth. Section III presents a summary of the tentative reform proposal with this aim, while Section IV concludes with reflections on the work that needs to be done, where the mitigation of the legal myth of shareholder primacy is placed in the broader context of the ongoing research project Sustainable Market Actors for Responsible Trade (SMART).

Ubuntu as a Tool for Resilience: Arts, Microbusiness, and Social Justice in South Africa

Ubuntu is a complex concept, but at its simplest is “human‐ness,” the notion that individuals’ well‐being is intertwined with that of others in the community. This article examines how ubuntu s multiple meanings offer a potential tool for resilience in South Africa, both for arts organizations and for micro and small businesses. Artist Proof Studio offers a sustained working example of how creativity can make a contribution towards a more just society using a hybrid arts/business model. The arts are particularly important in South Africa for offering the space to address deep wounds, using artistic collaborations to contribute to resilience and wellbeing. Ubuntu can offer an alternative vision to financing micro and small business to the one currently proposed by international lending organizations that seek to import Western‐style models of shareholder primacy, short‐term profit, and privatization of public goods. Ubuntu allows for creative new approaches to business, encouraging hybrid models that are socially focused and economically sustainable. The arts have the potential for a significant role in conceiving of ubuntu as a tool for resilience of micro and small businesses and as a way of conceptualizing being human in the business context, helping to envision productive and sustainable activities that advance greater economic sustainability.

Theorising Effective Corporate Governance: Models vs New Institutional Economics

Until the explosion of the North American corporate scandals at the turn of the century, the trajectory of corporate governance theory pointed to a convergence that was recognised as the “end of history of corporate law” (Hansmann and Kraakman 2001). This trend rested on the perceived supremacy of the business model adopted chiefly in the United Kingdom and the United States, based on shareholder value, on the diffusion of widely held firms and on the over-reliance on market mechanisms for the regulation of corporate governance. Convergence was in particular thought to lead to a normative consensus related to the application of shareholder value. This was due to the belief – especially among financial economists initially – that aligning managerial decision-making to the interest of shareholders would lead to economic efficiency (Hansmann and Kraakman 2001). Emphasis on economic-centric thinking promoted the concept of efficiency ahead of other policy priorities (such as long-term sustainability for instance) and in turn justified the corporate goal of maximising returns for shareholders, through the increase in share price, as the best allocation of resources (Friedman 1970, pp.32, 33). The “end of history” would thus be represented by an increasingly widespread application of the shareholder primacy ideology at global level.

Controversies about agency theory as theoretical basis for corporate governance

The issue of corporate governance is being taken up by different branches of science. Particular views on the nature and goals of a firm, as well as on corporate law, determine various approaches to the issue. The ongoing debate on corporate governance is being stimulated by notorious scandals and economic crises. The agency theory (prevailing today), which assumes egoism and pursuit of one’s own interests, forms the basis for shareholder primacy model, while team production theory forms the basis for director primacy model. Stewardship theory, which assumes convergence of management’s and stakeholders’ interests, may be competing or complementary towards the agency theory, depending on situation. According to management theory, efficient management requires law regulation of managers’ status. This paper is aimed at presenting controversies about traditional agency theory as theoretical basis for corporate governance, as well as at discussing other perspectives on the issue, which are extensions of the traditional theory or are based on substantially different premises. The analysis shows that going beyond agency theory allows for better understanding of the whole range of models of corporate governance as well as of the changes that are being proposed in the area. The method utilized in this paper is descriptive and comparative in character.

Bridge Over Troubled Water: Corporate Law Reform for Life-Cycle Based Governance and Reporting

In spite of all the business initiatives using a sustainability language status quo remains very much unchanged: ‘business as usual’ continues, and is a very certain path towards a very uncertain future. The dire status as regards the convergence of environmental crises facing global society is encapsulated in the concept of ‘planetary boundaries’, first identified in the ground-breaking article by Rockstrom et al. in 2009, and updated and re-affirmed by Steffen et al. in 2015. Planetary boundaries define global sustainability criteria for critical environmental processes that regulate the stability of the life-support systems on Earth, defining nine parameters of the earth system to indicate a safe operating space for humanity. According to Steffen et al., human production and consumption is placing us in increasing or high risk in relation to at least four of the boundaries: climate change, biosphere integrity (genetic diversity, with uncertainty concerning the boundary for functional diversity), land system change, and biogeochemical cycles (phosphorus and nitrogen). The grand challenge of sustainability lies in securing the social foundation for humanity now and in the future, while staying within the planetary boundaries; in Kate Raworth’s words: achieving a safe and just operating space for humanity. Business contribution to meeting this grand challenge is vital. This paper concentrates on the contribution of the dominant legal form of business: the company. The paper first discusses why we are in this situation of corporate unsustainability: why has neither the mainstream corporate governance debate nor the more progressive CSR movement provided helpful answers? The answer lies in the perception of the nature of the company and of the role of regulation that informs these two alternative streams (Section 2), where the social norm of shareholder primacy dominates and where law, and notably company law, to a great extent has been ignored. This is also true of the business and human rights movement, although its innovative approach has the potential for contributing to breaking down barriers between social norms and law.The paper continues with discussing the role of the law, arguably the most powerful tool for society to implement the social norms that society on a high political level agree on: where and how has law failed in ensuring that companies create value in an environmentally, socially and economically sustainable way? That section concludes with an identification of the main barrier to sustainable business: the social norm of shareholder primacy that has taken over the discretionary space company law has given corporate decision makers, and the explanatory power of this recognition for the failure of the most favoured legislative tool for sustainability: reporting (Section 3). Legislative efforts at promoting sustainable business through reporting requirements risk continued failure because of the chasm between the perceived role and duty of the board and by extension management, and what boards and management are asked to report on.The recognition of the chasm between the perceived role and duty of the board and management, and the reporting requirements, helps identify a possible solution (Section 4). The research-based corporate law reform proposal presented here has the potential of being a ‘bridge over troubled water’, spanning this chasm and giving content to the new ‘non-financial’ reporting requirements of the EU. Section 5 concludes.

Shareholder primacy, controlling shareholders and Malaysia’s Companies Act 2016

ABSTRACTThe predominant corporate governance model within the Commonwealth mimics that of the UK where powers of management are reserved for the board. This director primacy model, however, is being challenged by proposals to expand shareholders’ decision-making rights including giving shareholders the power to initiate their own proposals and to instruct the board. Amidst this debate, Malaysia has passed its new Companies Act 2016 which contains, amongst others, s 195 which empowers shareholders to make binding recommendations to the board relating to the management of the company. Empowering shareholders by giving them such powers have been the subject of intense criticisms. This article examines s 195 and the shareholders participation eco-system to provide an idea of the law in practice as well as to address the concerns relating to giving shareholders such expansive power. This article advances the view that the decision-making framework under the Companies Act 2016 and the actual functioning of the power to instruct show that these criticisms may be unfounded and the potential setbacks of shareholder empowerment can be minimised through judicious use of legal rules.

Submission to The Business Skills and Innovation Commons Select Committee: Corporate Governance Inquiry

This Submission deals with corporate governance reforms that we propose are needed in the UK.The context for this Parliament Inquiry into corporate governance in the UK largely revolves around public distaste for the ‘unacceptable face of capitalism’ (eg see ‘Philip Green is not the only unacceptable face of capitalism’, Financial Times (28 July 2016)) which has manifested itself in several recent corporate scandals, such as those at BHS and SportsDirect. We believe that the capitalist model is still a sound basis for economic order as it can be supportive of individual development and freedom, economic growth, and aligned with our democratic values. However, modern capitalism is interposed by the corporation (eg Galbraith, 1976), now the predominant way of organising business and enterprise. For various reasons, the modern corporation can fall short as an effective vehicle through which to realise the optimistic capitalist vision.In the UK, the legal construct of the modern corporation is a ‘separate legal person’ subject to internal control by the ‘Board of Directors’ and, to a greater latitude than in many jurisdictions, by shareholders. The dominant ‘contractarian’ ideology of the corporation which underlies shareholder primacy unabashedly supports the purpose of the modern corporation as maximising shareholder wealth. Neither the legal nor prevailing ideological construct of the modern corporation reflects the reality that (a) the economic organisation is made up of many more parts than its ‘Board’ or shareholders, and (b) the societal institution that is the corporation serves multifaceted purposes and carries out activities not narrowly confined to shareholder wealth maximisation. Where recent corporate practices now reflect the ‘unacceptable face of capitalism’, we argue that this is because such practices are based on exploiting the limits in existing corporate law and ideology, i.e. pursuing a narrow-minded view of ‘shareholder primacy’ which ultimately subverts the more positive elements that could characterise a capitalist economic system.Importance of Corporate Governance: The economy-wide framework of corporate governance (as embodied in both legislation/regulations imposed by the state and company-level business practices and attitudes) could play a significant role in driving recognition and fair valuation of plural and diverse sources of ‘capital’ mediated by the modern corporation. We should not accept that corporate governance should only be about the Board’s accountability to shareholders. The argument for accepting such a model, which has been in the past justified by arguments concerning corporate efficiency, is increasingly weak, as the US and UK corporate sectors, representative of this approach, have produced many instances of corporate scandals and malpractices, and have contributed greatly to social inequality. It is also increasingly clear that a corporate objectives driven by considerations of short-term shareholder value maximisation are associated with various undesirable features of the UK economy, such as internationally weak levels of research and development expenditure (less than half that of China as a percentage of GDP), an unhelpful tendency amongst listed companies to distribute cash flow to shareholders (through share buy-backs and dividends) rather than re-invest in innovation, training and long-term success, and low levels of labour productivity relative to other advanced economies. Rising levels of income inequality and low levels of public trust in business are also deleterious side effects of the UK model of corporate and economic governance.This does not mean that we argue for corporate law to intervene into the distributive outcomes in a corporation directly, as we view this approach to be too intrusive. We argue that there is a need for more emphasis on ‘procedural justice’, i.e. in the adoption by companies of a framework for corporate governance where the voice of different ‘capital’ suppliers to the corporation can be heard in such a way that the interests of any one powerful group may be effectively balanced and complemented.We submit that: (a) Directors’ duties framed towards the long-term success of the company is the correct position but the current s172 should be redrafted and flanked by new duties proposed in this submission;(b) The corporate governance of a corporation must incorporate ‘key stakeholder’ representation in salient decisions;(c) There should be a case for considering duties for controlling shareholders whether in private or public companies in order to be consistent with the long-term success of the company as a whole;(d) There is scope for more governance over executive pay other than relying on shareholders’ vote. Executive pay levels at larger companies often represent the unbalanced and distorted face of capitalism that society is increasingly finding unacceptable and symptomatic of weak underlying governance;(e) Reform in Board composition that reflects a balanced corporate governance framework is desirable.

Shareholder Primacy, Corporate Social Responsibility, and the Role of Business Schools

Shareholder Primacy, Corporate Social Responsibility, and the Role of Business Schools

The Cultural Grammar of Governance: The UK Code of Corporate Governance, Reflexivity, and the Limits of Softt Regulation

We identify limits of ‘reflexive governance’ by examining the UK Code of Corporate Governance that is celebrated for its ‘reflexivity’. By placing the historical genesis of the Code within its politico-economic context, it is shown how its scope and penetration is impeded by a shallow, ‘single loop’ of reflexivity. Legitimized by agency theory, the Code is infused by a ‘cultural grammar’ that perpetuates relations of shareholder primacy as it restricts accountability to narrow forms of information disclosure directed exclusively at shareholders. Engagement of a deeper, ‘double loop’ reflexivity allows account to be taken of the historical conditions and theoretical conceptions that shape practices and outcomes of corporate governance. Only then is it possible to disclose, challenge and reform narrow conceptions, boundaries and workings of ‘reflexive governance’.

Shareholder Primacy, Labour and the Historic Ambivalence of UK Company Law

Most directors and senior managers of UK companies would likely regard it as trite law that, in undertaking their managerial and/or control functions, they are accountable first and foremost to their employer firm’s general body of shareholders. It follows that the interests of other corporate constituencies – and, in particular, those of employees – must ultimately cede to those of shareholders in the event of conflict. Although frequently taken for granted today, the lexical priority that the British company law framework affords to the interests of shareholders over those of other corporate constituencies is remarkable, not least when viewed alongside the correspondingly disempowered corporate governance status of labour in the UK. However, whilst the centrality of shareholders’ interests to the doctrinal and normative fabric of contemporary UK company law is both manifest and incontrovertible, this has curiously not always been the case. In this paper I argue that, whilst UK company law might look substantively stable and well-settled on its surface today, on closer inspection this facade of apparent calm can be seen to mask a fairly recent history of doctrinal and ideological turbulence with regard to fundamental underlying concerns. There is thus cause to question whether the basic normative impetus of the UK’s company law framework is as complementary to its surrounding economic and socio-political context as might first appear.

Tension between Shareholder Primacy and (Quasi) Monopoly: A Theoretical Analysis of Controlling Shareholder Economies and China

Professor Mark Roe explained that the shareholder wealth maximization norm (“the norm”) is not appropriate for a country with a (quasi) monopoly, because the norm encourages managers to maximize monopoly rents to the detriment of the national economy. This Article provides new findings and counter-intuitive arguments on the tension created by the norm and (quasi) monopoly, by exploring three key corporate governance concepts that Roe did not examine — (1) “controlling minority structure” (CMS), where dominant shareholders hold a fractional ownership in their controlled-corporations, (2) “tunneling” (i.e., the transfer of corporate wealth to controlling shareholders), and (3) Chinese state-owned enterprises (SOEs). First, given (quasi) monopoly, this Article considers the impact of CMS. CMS controllers, due to their fractional economic interests (e.g., 5% ownership), do not have a strong incentive to vigorously follow the norm. When the norm is not actively sought, public shareholders lose the opportunity to gain the maximum monopoly profits. A positive byproduct, however, is that national welfare is improved, since non-maximized monopoly profits do not hurt society and consumers to the fullest extent. Second, given CMS and (quasi) monopoly, this Article analyzes the impact of tunneling. Since tunneling provides more cash flows — including illicit cash flows — to CMS controllers, it strengthens their incentive to maximize shareholder wealth. The direct effect of tunneling to public shareholders is, by definition, negative. Counter-intuitively, however, tunneling is indirectly beneficial — to some extent — to public shareholders, due to CMS controllers’ reinforced incentive to increase profits. Thus, the net effect of tunneling on public shareholders is mixed. In regard to social welfare in (quasi) monopoly CMS, tunneling has a negative effect, since it encourages CMS controllers to pursue monopoly rents in a more aggressive manner. Third, this Article calls into question the effectiveness of the norm in a context of Chinese SOEs that do their business in domestic markets. Formally, the controlling shareholder of Chinese SOEs is the party-state. The party-state is, however, an agent of its citizens, who are the “ultimate shareholders” (and consumers). Given the (quasi) monopoly held by SOEs in China, the norm will encourage SOE managers to set a monopoly-profit maximizing price in domestic markets. Such pricing is beneficial to the citizens of China as the “ultimate shareholders” when the government holds a high percentage of ownership in an SOE. However, the pricing damages the citizens of China as consumers. Under certain circumstances, the combined effect of the norm on the “ultimate shareholders” — i.e., the citizens of China — could be a net loss if a significant amount of welfare in society disappears as dead-weight loss (DWL) in the national economy.

Trying to save the world with company law? Some problems

This paper aims to unravel two connected errors in the current critical position on companies. Since the financial crisis, there have been a growing number of voices in the academic community raised against the shareholder value driven corporate sector. The often conservative and highly doctrinal voices of English company lawyers have become in parts more radicalised and have found common research ground with varied academic disciplines and with company lawyers in other jurisdictions more accustomed to critical approaches. New ideas have been forged; old ideas have been rediscovered and re-examined. In the emerging networks, the neoliberal domination of the study of companies is being substantially challenged. As exciting as this is, I am concerned that critical scholars have cohered around a core claim about company law which is erroneous. Furthermore, they have largely assumed that the current economy can sustain a social agenda as well as creating profit. This, I argue, hugely underestimates entrenched problems in the economy. In unravelling these issues my aim is to reorientate challenges to shareholder primacy and to the claims of capital more generally.

Profit, People, Planet, and Perversion: The Need for Attorney General Enforcement in Benefit Corporation Legislation

For-profit, social entrepreneurship is a growing movement. As a result, in recent years, legislation authorizing the incorporation of a new form of for-profit business corporation known as a “benefit corporation” has been signed into law in numerous states. In addition to generating profit for shareholders, benefit corporations must “create” a “public benefit.” The requirement that a corporation support a humanitarian cause in addition to turning a profit is a significant departure from shareholder primacy — the idea that the sole purpose of a corporation is to make money. While this legislation is a progressive and needed evolution in U.S. corporate law, the current benefit corporation form includes only limited, toothless accountability and enforcement mechanisms. The current legislation does little to deter bad actors from taking advantage of socially conscious consumers willing to pay a premium for ethically sourced goods and services. This Note argues for the addition of attorney general oversight and enforcement in benefit corporation legislation in order to root out and deter the incorporation and marketing of sham benefit corporations.