For Whom is the Corporation Managed in 2020?: The Debate over Corporate Purpose
A GLOBAL ONLINE SEMINAR SERIES FROM THE EDITORS OF THE ECGI WORKING PAPER SERIES
The second seminar in the ECGI Spotlight Series took place on 14 September 2020 at 16:00 CEST (10:00 EDT).
You can download Edward Rock’s presentation slides here.
You can download the working paper here.
ABOUT THIS EVENT
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, the author takes this debate to be an interesting development in corporate governance and tries to understand and explain what is going on. Prof. Rock argues 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? He argues 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.
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