Shareholder primacy states that a company’s board of directors—the group ultimately responsible for running corporations—must focus on maximizing the return for shareholders. The directors must do so even if the returns come at the expense of other groups that have tied their futures to the company, such as employees, customers, suppliers, and the communities in which the companies do business. Shareholder primacy says that if boards can increase long-term profits by 1 percent by firing one thousand employees, they should do it. If they can improve profit margins slightly with a new manufacturing process that will pollute the environment more, they should do it (as long as the new pollution does not run afoul of the environmental laws). If they can reduce expenses by moving their manufacturing base away from a city that has nurtured it for generations, then the law requires them to move.
Shareholder primacy is the dictate that most people who run corporations—the officers and the members of the board of directors—believe they must obey. From this perspective, shareholders are the entire reason corporations exist. All of the other groups who contribute to the enterprise’s success must look out for themselves. The corporation’s job is to extract as much value from these other groups as possible while paying them as little as possible, maximizing shareholders’ wealth.
In this chapter, we examine this idea that took companies that were rapidly improving their workers’ lives and transformed them into machines for making the rich even richer. It is the same idea that led many corporations to close factories in communities that had supported them for decades, destroying entire towns that depended on the jobs those factories provided. And it is the same idea that encouraged corporations to intervene in politics in an effort to loosen the regulations that were intended to police bad corporate behavior, including those designed to protect our planet from environmental degradation and the ravages of global warming.
To understand the impact the shareholder primacy doctrine may have on corporate conduct, we first need to establish how people behave when they are part of a group. We know that human beings are often kind, honorable, and benevolent, but that they can also be cruel, devious, and maleficent. People are seldom only good or only evil; most of us act differently at different times, and our decisions often stem from a mixture of motives. Few people have characters so strong that they always choose the same way. Even when facing similar decisions, we may act differently based on a host of factors, from how someone treated us earlier that day to whether the object of our attention bears a passing resemblance to an ex-lover.
Most important for purposes of this book, our choices often depend on the behavior of those around us. Peer pressure is a familiar concept when dealing with teenagers, but the phenomenon exerts an equally powerful effect on adults. We often behave differently based on our read of the room.
A famous set of experiments to demonstrate the power of peer pressure in the laboratory were performed by social psychologist Solomon Asch in the 1950s at Swarthmore College. Asch wanted to explore people’s willingness to go along with the group, even when they knew that the group was objectively wrong. He handed experimental subjects a card with three printed lines and asked subjects to identify which of the three matched the length of a line on a second card. This was a very simple task; almost everyone answered the question correctly when alone.
Asch tested how people’s answers would change when influenced by peers. He put subjects in a room with several confederates, then asked the confederates to answer the question before turning to the subject. When the confederates answered the question correctly, so did the subject. But when the confederates all chose the wrong line (following Asch’s instructions), the experimental subjects often followed along, choosing the line they knew did not match. In fact, about 70 percent of the subjects chose the wrong answer at least once under the influence of their companions’ unanimous (but wrong) choice.9
These results are surprising, but the consequences of choosing the wrong line seem minimal. Surely when there are real stakes involved, when people’s lives will be seriously affected by what someone does, people will stand up for what is right, won’t they?
Stanley Milgram conducted a series of experiments at Yale beginning in 1961 that shed some light on this question, though under circumstances that tested subjects’ willingness to resist an authority figure rather than a group of peers. Milgram told his subjects that they were conducting an experiment on the value of electric shock punishment in aiding learning. The subjects were assigned the role of teachers and sat in a room where they could not see the supposed student (who was actually in on the experiment) but could hear him. The “teacher” would ask the “student” questions and shock the student whenever the student’s answer was incorrect, using higher and higher levels of electricity with every wrong answer. No actual shocks were ever administered, but the teachers heard prerecorded reactions to the shocks they thought they were administering. The reactions included vigorous protests and eventually demands to be free before falling silent. Teachers who became reluctant to continue administering the shocks were given a series of prompts to encourage them to continue, such as, “It is absolutely essential that you continue.” If they continued to refuse after four such prompts, the experiment ended. The experiment also ended if the teacher gave the maximum shock three times. Sixty-five percent of the teachers administered the highest level of shock.
Philip Zimbardo conducted an experiment at Stanford in 1971 with parallel results. He randomly assigned volunteer college students to take on the role of either prisoners or guards in a simulated prison. The guards quickly fell into their roles. Many began to abuse the prisoners in a variety of ways. Guards forced the prisoners to repeat their assigned identity numbers and punished them with extended exercise whenever they made mistakes. They also punished prisoners by forcing them to urinate and defecate into a bucket in their cell and then refused to permit the prisoners to empty the bucket. Guards confiscated the prisoners’ mattresses at times, forcing them to sleep on concrete, and stripped some prisoners, leaving them naked. The experiment was originally planned to run for two weeks but was canceled after six days when a graduate student objected to the experiment’s morality.
Both Milgram’s and Zimbardo’s experiments have been criticized on ethical and methodological grounds, but they demonstrate the human capacity to do horrible things when someone perceived to be in authority orders them to do so (the experiment administrator in the Milgram study and the “prison warden” in the Zimbardo simulation). This effect is particularly strong when reinforced by peers. If everyone around us is behaving the same way, we tend to believe that that behavior is appropriate.
Corporate culture takes full advantage of this tendency to inculcate behavior in employees that furthers corporate goals. Companies teach new employees, “This is how things are done here,” or conversely, “That’s not how we do things here.” Strong corporate cultures can imbue employees with purpose, a sense of community and belonging, and a desire to advance the company’s mission. This is helpful to the company because the employees become more dedicated and efficient. Employees also may benefit from a healthy corporate culture because they feel that their work serves a noble aim, even if that aim is just helping their team, a group of people they value and respect. Whether the culture is healthy or not, the orders that come from the company’s leaders will tend to be followed, as the Milgram experiment showed. And when employees are surrounded by others who echo leadership’s message, the effect is magnified, as we saw in the Asch and Zimbardo experiments.
Organizing people into cohesive groups not only magnifies the extent of obedience to authority, it also multiplies the power of those who wield that authority. An individual can write a symphony, but it takes a highly coordinated group to perform one. Or for a less enlightened example, one person can operate a street corner drug sale operation, but it takes an international criminal gang to produce the drugs, smuggle them across borders, and distribute them around the world. Gathering people into groups multiplies resources while at the same time legitimizing even highly nefarious behavior as acceptable under the organization’s code of conduct. The end result is that those who lead these groups can become enormously powerful.
The power these groups have can be used to achieve tremendous good for humanity. The modern corporation is arguably the most successful innovation in human organizational behavior since the Roman Empire. Humanity is materially richer now than at any previous moment in recorded history, and much of the credit should go to the corporate form. Corporations have organized staggering amounts of capital, labor, and natural resources to produce the greatest pile of wealth humanity has ever seen. They have built roads, bridges, railroads, and airports. They have developed life-saving medications and the hospitals that administer them. They have defeated Malthusian predictions of global starvation by wringing previously inconceivable amounts of food from farms. They have made all of humanity’s knowledge available on a device that can fit in a pocket and manufactured that device cheaply enough for billions to afford one. In short, corporations have wrought miracles, all in the name of shareholder value.
But those miracles came at a price, demonstrating that leaders’ power can also be used for great ill. Corporations used up irreplaceable natural resources to build our infrastructure. They left millions without medical insurance and bankrupted hundreds of thousands who could not afford to pay their medical bills.10 They soaked our farmland with chemical fertilizers and fed us genetically modified plants, both of which will have unpredictable impacts on our health and the broader environment.11 They provided communication tools that made us feel paradoxically more alone and bereft of community.12 They acquired their competitors and concentrated power into fewer and fewer hands, giving themselves the power to set prices and suppress innovation that threatened their market position.
For good or ill, there is no denying that corporations possess massive amounts of power. The largest corporations are wealthier than many countries. If we think of a corporation’s annual revenues as roughly analogous to a country’s gross domestic product, then Apple’s 2018 revenues of $265.6 billion would rank it forty-first among the world’s nations, just below Finland and above Egypt, Portugal, Greece, and New Zealand.13 If we instead compare Apple’s revenues to governmental budgets, then Apple would rank fifteenth, just above Russia and Sweden.14
We can appreciate all the benefits corporations have conferred on us and still be wary of how such large, wealthy institutions make decisions. Even if we assume that on net, corporations have improved our lives, we can and should still ask how they can do a better job with fewer ill effects.
For example, while corporations undeniably improved the standard of living for the US middle class between 1945 and the early 1970s, the middle class’s progress has slowed to a crawl since then compared to the upper class’s progress.15 While the highest earners’ income has risen very quickly since 1979, the vast majority of US income earners (those in the bottom 90 percent) have seen their real wages rise at about one-tenth the rate of those in the top 1 percent (15 percent compared to 138 percent).16 Even this stark statistic masks how dire the situation has become. Generally the less people earn, the slower their wages have grown. The wages of those smack in the middle (at the 50th percentile) rose only 6 percent from 1979 to 2013, and those near the bottom (at the 10th percentile of income earners) actually saw a real decline of 5 percent during those decades.17
Why did companies improve incomes for the working and middle class for the first few postwar decades, yet fail to do so in more recent decades? Many causes undoubtedly contributed to this shift, from the decline in unions’ power to the rise of globalization and the growing automation of many jobs. But we can also ask “why?” for each of these contributing causes. Why did unions decline? Why did globalization occur? Why did companies automate so many jobs?
A large part of the answer to these questions is corporate directors’ and officers’ belief that their primary responsibility—perhaps their sole responsibility—is to run the company so as to maximize shareholders’ return. The social psychology literature tells us that individuals often conform to groups. When a group adopts a purpose, its members are likely to see the pursuit of that purpose as a legitimate goal, at least when doing so does not conflict with other moral values and—as the Milgram and Zimbardo experiments so vividly demonstrated—sometimes even when it does. This tendency is especially strong when those in authority endorse that purpose. Groups use legitimizing language that distances the ethically questionable aspect of actions that meet their goals and tend to ignore or avoid arguments the majority opposes.18
Directors whose boards have adopted shareholder primacy as their dominant guiding value may therefore conform to the group’s moral judgment. They may adopt a mind-set that suggests that it is the government’s responsibility to police the ethical lines of a corporation’s behavior, while the directors’ task is to make as much money for shareholders as possible. They may also rationalize prioritizing shareholders with arguments that shareholders deserve to be the focus of boards’ attention. For example, defenders of shareholder primacy sometimes argue that corporations will be more efficient if the “residual claimants” have unified interests. An enterprise’s residual claimants are those who receive whatever is left over after all those with fixed claims on the company’s revenue stream have been paid in full. Shareholders are typically seen as the residual claimants in a corporation because they have no right to any defined payment, as opposed to other corporate constituencies such as employees and creditors who have a contractual right to set payments. The argument is that corporate boards will do a better job managing the company for one set of residual claimants than if they try to balance the needs of groups with opposing interests, and shareholders should fill this role because the absence of a contractual right to a fixed payment makes them uniquely vulnerable.19
Corporate governance law assists in this moral outsourcing by ordering directors and officers to maximize shareholder value under the shareholder primacy doctrine. Corporate agents who instead divert company resources to improving employees’ lives, cleaning up the environment, or supporting the communities in which the company functions face the possibility of personal liability for doing so in a shareholder suit. An emotionless, risk-neutral agent might ignore this possibility, since the threat of this sort of liability is not terribly realistic. The law grants great deference to officers’ and directors’ decisions under a doctrine called the “business judgment rule,” a concept we discuss in Chapter 2. As long as directors can make a coherent argument that their actions will lead to larger corporate profits eventually, they are almost certain to escape liability.
The deference courts grant to corporate boards does grant wide latitude to boards to take good care of their employees, invest in their communities, and protect the environment. The ESG (environmental, social, and governance) movement demonstrates that many corporate boards are taking advantage of this freedom to craft corporate strategies that sacrifice short-term profits for the sake of the environment, social goals, and good governance. For example, Dick’s Sporting Goods chose to stop selling guns at hundreds of its stores, sacrificing significant profits. The board could argue, though, that the move might prove profit maximizing. The directors could claim that the company’s decision boosted its reputation, making at least some customers more eager to shop there and increasing overall sales. Although the company sacrificed the profits from gun sales, profits overall might rise as customers who favor gun control chose to shop at Dick’s Sporting Goods rather than at Big 5 or some other competitor. An irate shareholder who sued the board over this decision would have very little chance of overcoming this argument under the deference afforded under the business judgment rule. In this particular case, the rationale seems to have worked out in practice: sales increased at stores where the company no longer sold guns.20 But this type of argument—that the board is sacrificing immediate profits to boost the company’s reputation and therefore increase profits over the long run—will almost always protect boards from liability for violating the duty of care.
Despite this latitude to sacrifice short-term profits, the law’s shareholder primacy mandate has a real legitimizing impact, culturally, rhetorically, and emotionally. Actual liability for violating the rule is not very likely, but directors whom the law instructs to maximize profits are likely to engage in a sincere effort to do so. Often the quest for profits over the long run will result in boards’ choosing policies that protect the environment and promote the welfare of employees and communities, but these goals may also diverge. When they do, directors are likely to choose profits over purpose, as the law requires.
Legal scholars have echoed the message that it is the government’s job to decide on the outer limits of proper corporate behavior.21 Directors and officers must play within the rules, but as long as they do, their duty is to make every effort to “win” by earning as much money for shareholders as possible. We might then understand why officers and directors would fear violating the shareholder primacy norm, even if objectively, the liability risk they face is minimal.
One profound problem with allowing corporations to export their moral compass to the government is that the law permits corporations to influence governmental decisions about the rules of the game. Even before the Supreme Court’s Citizens United decision in 2010 solidified corporations’ ability to participate directly in elections, corporations had long influenced the legislative process by lobbying for their preferred rules.22 Individual directors and officers also helped shape policy with their (already legal) campaign contributions. Now that corporations can try to persuade the public to vote for their preferred candidates directly by paying for political advertisements and making campaign donations, boards must decide where to direct their company’s powers of suasion.
Here, the discussion comes full circle. Directors, we now know, owe a duty to maximize the value of the company on behalf of its shareholders. Their efforts should therefore aim at crafting a friendly regulatory environment that provides as many advantages as possible to the business. In many cases, directors may reasonably see their duty as requiring them to try to soften rules that protect the environment, consumers, employees, and competitors. How reassured should we be, then, when companies defer to governmental regulation to define the acceptable bounds for their behavior?
Shareholder primacy presents a difficult conundrum to those of us who care about our country’s and planet’s well-being. The doctrine instructs directors to focus exclusively on increasing corporate profits and to look to the law outside of corporate governance—such as minimum wage statutes and environmental regulations—for guidance on the limits of permissible action. But then the law governing lobbying and political speech permits both corporations and their executives and directors to try to shape the rules that in turn describe the outer bounds of legal corporate behavior. Assuming that shareholder primacy governs those rule-shaping efforts as well, corporations are required to take all legal steps to eliminate any rules that stand in the way of their maximizing profits. This seems a deeply troubling result.
At this point, we might justifiably be wondering how corporate law has gotten so twisted up. Corporate law is a technical and sometimes difficult subject, but at its core, law in a democratic society is supposed to reflect that society’s values. This is true even of technical areas like corporate law. We value economic development, and corporations have certainly provided that. But we value development because we believe that a growing economy will improve everyone’s lives, not just those of the wealthy. That notion seemed to work well for the first few decades after World War II, but it has largely failed us since the 1980s. Corporate law—and shareholder primacy in particular—seems to bear a good part of the blame for that failure, so it is worth asking why a democratic country has adopted such a troubling fundamental rule to guide its most important economic actors.
To understand the rationale behind shareholder primacy, we must start with a few basics about corporate governance law in the United States. For many topics, both federal and state law have the power to set legal standards. They both have authority, for example, over environmental regulation, workers’ wage and hours rules, and consumer protections. When it comes to the law that governs the relationship among shareholders, officers, and directors, however—what is generally termed “corporate governance law”—state law provides most of the rules. Federal law, especially federal securities law for public companies, sometimes intervenes, but traditionally state law controls most corporate governance issues.
With fifty states, plus the District of Columbia and territories such as Puerto Rico, Guam, and the US Virgin Islands, how do corporations know which state’s laws cover their corporate governance disputes? The answer is surprisingly simple: the board chooses. Each corporation must register in a single state or territory by filing its documents with that state’s secretary of state and paying a special tax, called a franchise tax, for the privilege of existing under that state’s laws. Corporations are free to choose any state they like; they are not required to have a significant business presence in their state of incorporation. A state whose headquarters is in California, does most of its business in Florida, and whose investors mostly live in New York is free to register in North Dakota if it so pleases. In addition, corporations may change their state of incorporation at will by filing the appropriate documents and paying the required fees. For as long as a corporation is registered in a state, the laws of that state will govern the relationship among its officers, directors, and shareholders under the “internal affairs doctrine.”23
The internal affairs doctrine creates an incentive for state legislatures to craft their corporate governance laws to please corporate boards in order to lure more corporations to register in their state. Boards, not the shareholders, choose the state of incorporation, and incorporation comes with corporate franchise taxes. States competing for those franchise tax revenues have an interest in enacting corporate governance laws that will appeal to the corporate directors who choose the state of incorporation. In 2021, for example, Delaware’s state government projected that the incorporation tax (which includes not only the corporate franchise tax but also parallel taxes for other business entity forms and the fees foreign corporations pay to do business in Delaware) would account for 28 percent of the state’s budget.24
In a highly influential law review article, William Carey argued that this dynamic creates a “race to the bottom” for state legislatures, as they compete to attract directors by protecting them from shareholder suits.25 If this view is correct, we should expect to see state corporation statutes that make it very difficult for shareholders to prevail in any conflict with the board.
Other scholars, most notably Ralph K. Winter, have argued that the dynamic creates a “race to the top,” at least for publicly traded companies.26 Strategic directors will recognize, argued Winter, that shareholders will respond to the selection of the state of incorporation by discounting the shares of companies that incorporate in a state that makes it unduly difficult for shareholders to hold directors accountable for their misdeeds. In other words, a shareholder considering an investment in a company will check the company’s state of incorporation. If that state’s laws make it undesirably difficult to sue directors when they violate their duties to shareholders or define those duties too loosely to provide meaningful curbs on bad corporate behavior, the shareholder will refuse to invest without a price discount that compensates for the added risk caused by the director-favoring rules. Shares of companies incorporated in states that protect directors too much will then trade at a significant discount to those registered in states whose laws better enable shareholders to deter directors’ misdeeds. Directors, anticipating this reaction by shareholders, will choose to incorporate in states that provide higher share prices rather than those that provide better director liability protection. Presumably directors’ compensation packages will incentivize them to make this choice. State legislatures, understanding all of this, will enact corporate governance statutes that provide shareholders with a meaningful ability to punish directors who govern the corporation badly.
Whether the race is to the bottom or the top, it has a clear winner: Delaware. Despite its small population and even smaller geographical size, Delaware is by far the most important and influential state for corporate law.27 The majority of public companies and a supermajority of Fortune 500 companies are registered in Delaware.28 Delaware’s influence reaches even further than the corporations it governs directly; other states’ courts, knowing that Delaware courts have vastly more experience and expertise in regulating corporate governance, often adopt Delaware’s rulings as their own. As we think about the development and effects of shareholder primacy, then, we have to pay special attention to Delaware.
Oddly for such a fundamental rule of corporate law, shareholder primacy is not dictated by any state statute, even in Delaware. Instead, the doctrine traces back to a famous case dealing with the nascent auto industry in Michigan in 1919.29 The Dodge brothers, the founders of the eponymous car company, held a 10 percent stake in the then privately held Ford Motor Company. Ford Motor was enormously successful. Demand for its Model T outstripped its factories’ ability to produce new cars. The company was hugely profitable and by 1915 had paid its shareholders over $40 million in dividends. This amount was only a fraction of its profits, however; by 1916, the company had another $112 million in surplus over capital, including over $50 million in cash.
Henry Ford, the company’s founder, president, and majority shareholder, announced in 1916 that the company would no longer pay out large “special” dividends but would instead limit its payouts to shareholders to $2 million per year. The remaining profits would all be reinvested into the business to build more factories and hire more workers. The Dodge brothers sued Ford Motor and Henry Ford, demanding that the company pay out more of these profits to them as dividends.
The Dodge brothers’ suit also complained that Henry Ford was running the company as almost a charitable endeavor, aiming to benefit workers and customers rather than the shareholders. They pointed to a newspaper story that had quoted Henry Ford as saying, “My ambition, is to employ still more men; to spread the benefits of this industrial system to the greatest possible number, to help them build up their lives and their homes.”30 As support of this accusation, the Dodge brothers also pointed out that the company had originally priced the Model T at $900 but reduced its price sharply each year so that it was down to $360 in 1916. The Dodge brothers claimed that this reduction in price, when the company could not meet existing demand at higher prices, was a dereliction of Henry Ford’s duty to the company’s shareholders to maximize the company’s profits. The company could easily have sold every car it produced at a higher price, yet Henry Ford insisted on lowering the price every year.
The Dodge brothers also protested Henry Ford’s plans to expand the company by building a second factory, using what they saw as their money, the company’s retained earnings. The Dodge brothers asked the court to order Henry Ford to refrain from carrying out his expansion plans, to distribute at least 75 percent of the accumulated surplus to the shareholders, and to require the company to pay out all of its profits to the shareholders going forward, except as required for emergency business purposes.
Henry Ford admitted that his purpose was to benefit his workers and spread the perks of capitalism, but he also argued that the planned expansion was in the company’s best interests. His lawyer argued humanitarian motives were legally permissible, or at least mixed motives were, and that corporations were even permitted to engage in charitable activities so long as they were incidental to the business and not its core purpose.
The Michigan Supreme Court drew a distinction between incidental charitable activities and a “general purpose and plan to benefit mankind at the expense of others.”31 The former it declared legal, but the latter was beyond the powers of the board. The court went on to state, in blunt terms:
A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the nondistribution of profits among stockholders in order to devote them to other purposes.32
This language is arguably the clearest and most definitive statement of the shareholder primacy doctrine anywhere, and it is the reason this case appears in virtually every corporate law textbook. It serves as the source text for anyone claiming that shareholder primacy is the law of the land.
Ironically, the rule the court laid down in Dodge played no analytical role in deciding the case’s outcome. In legal parlance, the statement of shareholder primacy—definitive sounding as it was—was “merely dicta.” Dicta are judicial asides that are not necessary for the determination of the case. They are not considered binding legal authority, though courts may consider them to the extent they find them persuasive.
The Dodge court ruled that Henry Ford was free to continue with his business expansion plans. This ruling was an application of another foundational corporate law doctrine, the business judgment rule. In essence, this rule states that courts will not second-guess boards’ business decisions so long as they are reasonably informed, untainted by self-interest, and made in good faith. Courts generally do not feel qualified to run corporations. They also do not want to subject directors to personal liability based on information that developed long after the directors made their decision. For both of those reasons and to ensure that corporations remain able to recruit qualified directors, courts generally defer to boards’ business decisions.
In Dodge, the court ruled that Henry Ford could decide for himself how to run the company. Acting in his capacity as a director and with the consent of his fellow board members, Ford’s decisions were entitled to deference under the business judgment rule. The court, after delivering its lecture on shareholder primacy, essentially took Henry Ford at his word that his actions would ultimately benefit the shareholders. In fact, the court trusted Henry Ford’s good intentions toward the shareholders in the face of his representation that he was motivated by a desire to help his employees and society generally. To justify this move, the court pointed out that the company’s phenomenal success up until that point was pretty good evidence that Henry Ford knew what he was doing. The court wrote:
We are not, however, persuaded that we should interfere with the proposed expansion of the business of the Ford Motor Company. In view of the fact that the selling price of products may be increased at any time, the ultimate results of the larger business cannot be certainly estimated. The judges are not business experts. It is recognized that plans must often be made for a long future, for expected competition, for a continuing as well as an immediately profitable venture. The experience of the Ford Motor Company is evidence of capable management of its affairs.33
On the dividends issue, the court was less deferential, ordering the company to pay out substantial dividends. But that issue did not turn on Henry Ford’s supposedly charitable motivations either. Instead, the court pointed out that the company had plenty of money to pursue all of Ford’s expansion plans, keep a substantial sum of money in reserve for emergencies, and still pay out tens of millions in dividends. The nonpayment of dividends, or the payment of inadequate dividends, raises the specter of a conflict of interest between those in control of the company—in this case, Henry Ford—and the minority shareholders. Controlling shareholders have many powers at their disposal they can use to abscond with the company’s profits, freezing out the minority and depriving them of the reasonable value of their stock. Because of this potential for a conflict of interest, courts are far less deferential when evaluating a possible minority freeze-out than when they are passing judgment on an ordinary business decision.
Again, though, neither the court’s decision on the company’s expansion plans nor its ruling on dividends turned in any way on Henry Ford’s alleged humanitarian intentions. Nevertheless, we now explore the court’s powerfully confident language in laying down the shareholder primacy doctrine and how it has influenced both corporate behavior and the law.
Although orthodox corporate law has embraced shareholder primacy for a century, executives and directors did not internalize it wholeheartedly as a management norm until many decades after Dodge. During the 1950s and 1960s, executives believed they should prioritize customers and employees rather than shareholders when making corporate decisions.34 Respected management theorists such as Peter Drucker reinforced these views by arguing that treating employees well, for example, would ultimately benefit the company (and therefore comply with shareholder primacy, though that was not Drucker’s concern).35 These managerial attitudes may help explain why workers during those decades saw healthy increases in real pay, in sharp contrast to the more anemic growth in workers’ pay in recent decades. The law may have mandated shareholder primacy, but managers largely ignored this obligation, protected by the business judgment rule and by shareholders who either shared management’s views about the importance of other corporate constituencies or were too passive to bother challenging them.
This managerial view changed during the late 1970s and early 1980s as the country tilted rightward. Ronald Reagan captured the presidency while arguing for the deregulation of business. And Milton Friedman, the Nobel Prize–winning economist from the University of Chicago, pushed hard to persuade managers that they should focus exclusively on maximizing profits for shareholders.
Friedman wrote an article in the New York Times Magazine in 1970 entitled “The Social Responsibility of Business Is to Increase Its Profits.”36 The title of the piece aptly summarized its thesis. Friedman argued forcefully that corporate executives’ duty was to the company’s owners, the shareholders. Directing corporate resources to social causes such as improving employees’ wages or investing in a greener manufacturing process than required by law essentially amounted to picking the shareholders’ pockets. Friedman argued, “Businessmen who [advocate socially aware management] are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.37
Friedman’s sharp attack on corporate social responsibility resonated with a broader cultural movement of the 1970s: the rise of economic analysis in other fields of study, especially political science and law. Perhaps the culture was receptive to this hard-nosed, tough-sounding mode of thinking for other reasons: a desire for rules and order after the free-wheeling 1960s, a search for solutions to the relative decline of the United States in the face of renewed global competition, or just a natural pendulum swing in attitudes.
Regardless of why Friedman’s ideas took hold, there can be little doubt that they found fertile ground in the minds of directors and officers. Perhaps the best evidence of his influence are the changes in executive compensation that took place beginning in the late 1970s. Prior to this time, companies paid their CEOs primarily in cash salaries. Companies sometimes used bonuses that were tied to short-term corporate results, but these seldom amounted to a significant percentage of an executive’s compensation package.
Beginning in the 1970s and accelerating greatly through the 1980s and 1990s, major corporations began incorporating various forms of pay that tied executives’ compensation to the company’s stock price. By 2006, S&P 500 firms typically tied about half of a CEO’s pay to the company’s stock price, generally through awards of stock and stock options.38 The rationale that boards generally cited for this shift in pay structure was that they wanted to incentivize CEOs to manage corporations for the benefit of the shareholders. Although they may not have cited Friedman, this change in pay structure amounted to a full-throated endorsement of his view. CEOs whose pay depended largely on increasing the company’s stock price would presumably try to run the company in a way that boosted that price.
Do CEOs have meaningful control over share prices? Can CEOs even control the company metrics that influence share prices? There is little empirical support for either proposition. There are also serious reasons to doubt whether incentive pay works in this type of context at all, even if CEOs could influence share prices by working harder or smarter. But these are topics for another book. (Shameless plug: I’ve already written it.39) More to the point, whether or not tying pay to stock price helps to increase the stock price, the attempt demonstrates boards’ adoption of shareholder primacy as their core purpose.
Federal tax law implicitly endorsed this view when the Clinton administration attempted to bring CEO pay down to more earthly levels. Congress passed section 162(m) of the tax code to bar companies from deducting CEO pay in excess of $1 million from the company’s income. The theory was that companies would be deterred from paying their executives over $1 million because every dollar of CEO pay over that amount would have to come from the corporation’s after-tax income, making that pay considerably more expensive to the company. Congress added an exception to the bill, however, for performance-based compensation, which included stock options and performance shares (stock issued to executives only if the company meets certain performance goals). The net effect of the provision was to encourage companies to tie pay over $1 million to the company’s performance, especially its share price, so that the company could continue to pay executives out of pretax money, which can be considerably cheaper than paying out of after-tax money. This policy makes sense only if Congress believed that tying CEO pay to a company’s stock price was a good idea, and the only apparent reason why this would be a good idea is if Congress believed in shareholder primacy. (In an interesting postscript, the Trump administration eliminated the performance-pay exception to section 162(m) as part of the Tax Cuts and Jobs Act of 2017.)
The few courts to have the opportunity to consider shareholder primacy as a legal matter mostly followed Friedman and the Dodge v. Ford Motor dicta. The Delaware Supreme Court initially seemed to tip its hat in the other direction, in Unocal Corp. v. Mesa Petroleum Co., but then reversed course sharply the following year to assert its adherence to shareholder primacy.40 In a classic hostile takeover case, Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., the court ruled that boards could only consider other corporate constituencies besides the shareholders instrumentally, as a means ultimately to enrich the shareholders. As the court wrote, “While concern for various corporate constituencies is proper when addressing a takeover threat, that principle is limited by the requirement that there be some rationally related benefit accruing to the stockholders.”41 In Revlon, the Delaware Supreme Court quickly arrested its movement toward some alternative theory of corporate governance and reasserted its adoption of orthodox shareholder primacy.
The Delaware Supreme Court has not squarely addressed this question since Revlon, but the prestigious Delaware Court of Chancery has, in a case dealing with two famous brands: Craigslist and eBay.42 Craig Newmark founded Craigslist in 1995 as an email list for events taking place in San Francisco. Since that time, Craigslist—under the leadership of James Buckmaster, the company’s CEO—had grown into the dominant website for classified advertisements in the United States. Despite its success and large market share, Craigslist remained a small company, with only a few dozen employees at the time of the lawsuit in 2010.
Craigslist remained small in part because of its unusual culture and business strategy. Newmark and Buckmaster showed little interest in converting their commanding market share into profits. Instead, they let most people advertise on Craigslist for free. What little revenue Craigslist earned came from job postings in some cities and apartments listings in New York City, both of which cost the advertisers money to list on the site. Otherwise, Newmark and Buckmaster believed that Craigslist should be operated as a public service.
Craigslist had only three shareholders at the time of the lawsuit: Newmark, Buckmaster, and eBay. At that time, eBay owned about 28 percent of the company’s outstanding shares, leaving Newmark and Buckmaster together firmly in possession of a majority stake. Nevertheless, Newark and Buckmaster (the court refers to them as Craig and Jim) took several steps to protect the company’s mission from eBay’s efforts to adopt a profit-maximizing strategy. eBay sued to invalidate these steps and won. The court’s explanation of its holding is worth quoting at some length to provide a concrete sense of the Delaware courts’ wholehearted endorsement of shareholder primacy:
Jim [Buckmaster] and Craig [Newmark] did prove that they personally believe craigslist should not be about the business of stockholder wealth maximization, now or in the future. As an abstract matter, there is nothing inappropriate about an organization seeking to aid local, national, and global communities by providing a website for online classifieds that is largely devoid of monetized elements. Indeed, I personally appreciate and admire Jim’s and Craig’s desire to be of service to communities. The corporate form in which craigslist operates, however, is not an appropriate vehicle for purely philanthropic ends, at least not when there are other stockholders interested in realizing a return on their investment. Jim and Craig opted to form craigslist, Inc. as a for-profit Delaware corporation and voluntarily accepted millions of dollars from eBay as part of a transaction whereby eBay became a stockholder. Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders. The “Inc.” after the company name has to mean at least that. Thus, I cannot accept as valid for the purposes of implementing the Rights Plan a corporate policy that specifically, clearly, and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders—no matter whether those stockholders are individuals of modest means or a corporate titan of online commerce. If Jim and Craig were the only stockholders affected by their decisions, then there would be no one to object. eBay, however, holds a significant stake in craigslist, and Jim and Craig’s actions affect others besides themselves.43
Revlon and eBay seem quite clear: shareholder primacy is the law in Delaware for traditional corporations.44 Nevertheless, some respected scholars have questioned whether this is really true under Delaware law, as we discuss in the next section.
The most prominent critique of the conventional view that Delaware law requires boards to attempt to maximize shareholder profits came from Lynn Stout, a Cornell law professor. Stout argued that the deference courts offer boards of directors under the business judgment rule means that boards are free to consider other constituencies besides shareholders when determining corporate actions. All they need to have is some stated rationale—even a poorly reasoned one—for why considering these other constituencies will ultimately help the corporation’s bottom line. She wrote, “As long as [directors] do not take [corporate] assets for themselves, they can give them to charity; spend them on raises and health care for employees; refuse to pay dividends so as to build up a cash cushion that benefits creditors; and pursue low-profit projects that benefit the community, society or the environment.” 45
Stout was certainly correct that the business judgment rule affords directors tremendous latitude in forming corporate strategy. But she conflated deference to boards in forming tactics with permission to pursue different goals. Delaware law seems quite clear that shareholder primacy is the mandatory goal for corporate boards; they have no latitude to choose a different one, short perhaps of a statement granting them permission to do so in the company’s founding document, the certificate of incorporation. (As Stout acknowledged, most certificates of incorporation say simply that the corporation is authorized to pursue any lawful purpose, a phrase that has not been interpreted as opting out of shareholder primacy.46)
Directors of Delaware corporations are free to pursue whatever tactics they can claim in good faith they are adopting to maximize shareholder value. But they are not permitted to take actions that they acknowledge will harm the shareholders’ financial interests in order to help other corporate constituencies. As Leo Strine, the former chief justice of the Delaware Supreme Court has written, “Despite attempts to muddy the doctrinal waters, a clear-eyed look at the law of corporations in Delaware reveals that, within the limits of their discretion, directors must make stockholder welfare their sole end, and that other interests may be taken into consideration only as a means of promoting stockholder welfare.”47
Still, boards have the power to use the latitude both Stout and Strine acknowledged exists under the business judgment rule to pursue the welfare of other corporate constituencies, as long as their actions are ultimately intended to increase profits for shareholders. As a practical matter, then, there may not be much difference between Stout’s and Strine’s visions of Delaware law. The paucity of lawsuits where shareholders attempt to enforce a board’s duty to pursue shareholder welfare indicates that this distinction may be without a real difference. Cases like eBay, where the shareholder primacy doctrine was actually enforced, are exceedingly rare; in fact, eBay may be the only example in this century.
Some might argue that part of the reason for the lack of suits may be that many states have somewhat softened the shareholder primacy rule. The majority of states—though not Delaware—have passed constituency statutes that authorize directors to consider other corporate constituencies such as employees, customers, suppliers, and communities when making corporate decisions. Even in these states, though, directors are not required to consider the welfare of these other constituencies, and these other constituencies do not have the right to sue directors who ignore them. Courts have decided few cases that turn on these statutes, and the bulk of these involve hostile takeover attempts, with the defending board invoking the statute as an excuse for turning down a hostile offer. This is not terribly surprising, as most states adopted these statutes to help defend their corporations from hostile takeovers. These statutes have not had much impact on the corporate purpose debate within boardrooms and do not seem to have shaped directors’ behavior.48
Whether or not their states had a constituency statute, boards used their latitude under the business judgment rule to aid other groups quite often in the first decades after World War II, especially to improve employees’ welfare. They even used—and continue to use—this latitude to give money away to charities, arguing that donations to popular causes can improve a company’s public image and ultimately its sales.49
The law on shareholder primacy may play an important role in shaping managerial culture and thereby corporate behavior. But whatever work the shareholder primacy doctrine is doing is not through the realistic threat of imposing personal liability on directors and officers. That dynamic suggests that the linchpin to change corporate behavior is to transform managerial culture rather than to edit the liability rules. But it also suggests that reforming the law may prove an effective path to shape culture and behavior, regardless of any actual pecuniary impact of the new rules.
We have seen that without any amendment to the law, companies markedly changed their behavior after the 1970s. There are signs now that the cultural pendulum may be shifting back in the pro-constituency direction again. Several highly influential corporate authorities have recently embraced the idea that corporations should strive to do more than maximize profits for shareholders. A change in the law, such as the creation of a new type of business organization, has the potential to accelerate this shift by legitimizing the new attitudes.
Larry Fink, the founder and CEO of BlackRock, the largest asset manager in the world, wrote a letter to CEOs in 2017 that endorsed the stakeholder view, rejecting shareholder primacy. He wrote:
Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.50
Similarly, Marc Benioff, the chair and co-CEO of Salesforce, a cloud software company with a market capitalization over $100 billion, issued a call to companies to manage their businesses for the benefit of all stakeholders (such as employees and communities) and not just for shareholders. In an editorial for the New York Times, he wrote:
Every C.E.O. and every company must recognize that their responsibilities do not stop at the edge of the corporate campus. When we finally start focusing on stakeholder value as well as shareholder value, our companies will be more successful, our communities will be more equal, our societies will be more just and our planet will be healthier. 51
The cry by establishment figures for a new (or perhaps a return to an old) way of thinking about corporate purpose has not been limited to a few progressive corporate leaders. The Business Roundtable, an association of CEOs of major US companies, released a new Statement on the Purpose of a Corporation in 2019 in which it abandoned shareholder primacy and called for a stakeholder view. The statement, which pledged the CEO signatories’ commitment to their customers, employees, suppliers, and communities, in addition to their shareholders, concluded, “Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.”52
Fink, Benioff, and the Business Roundtable all called for voluntary shifts to stakeholder theories of management. Senator Elizabeth Warren of Massachusetts. however, was not content with relying on a gradual shift in corporate culture. In 2018, she proposed a mandatory legal shift when she introduced the Accountable Capitalism Act (ACA), a bill with a number of important provisions, but the most interesting for our purposes was a rejection of shareholder primacy. The ACA would require US corporations with over $1 billion in annual revenue to obtain a new, federal corporate charter that would require them to consider the welfare of all corporate stakeholders in making corporate decisions.53 In a press release announcing the bill, Senator Warren argued that “we need to end the harmful corporate obsession with maximizing shareholder returns at all costs.”54
The ACA may never become law, but for entrepreneurs interested in a business entity form that prioritizes all of a company’s constituencies, not just shareholders, and that also encourages companies to adopt social causes as part of their core mission, there is now a new form that does just that: the benefit corporation (BC). Advocates argue that the BC, along with its close cousin the public benefit corporation (PBC), have the potential to tame capitalism’s worst impulses while harnessing its enormous power to solve numerous social problems, from homelessness to global warming and from world hunger to health care. Critics have countered that this new legal form will aggravate agency costs by providing cover to directors and officers to entrench themselves and pursue their own interests at shareholders’ expense. The BC may fool constituents into thinking it is achieving real social progress while in reality, these critics maintain, it only provides a convenient mask for traditional corporate avarice.55
* * *
Which of these predictions turns out to be true depends most of all on you, the readers of this book. We have already seen that managerial culture likely matters more than the law in determining corporate actions. Will you adopt this new form for the companies you form or invest in or represent? How will you tackle the many challenges it poses? And how will you use it? Will you see it as a tool to make a reasonable profit and change the world for the better? Or will you try to take advantage of the BC’s positive image for your own private benefit?
Before we can get into any of that, we need a much more nuanced understanding of both traditional corporate law and the new provisions governing BCs. In this chapter, we discussed the history of corporate purpose in the United States, learning that the current view is that the purpose of corporations is to maximize profits for shareholders (shareholder primacy). BCs and PBCs change that purpose by statute to a broader, stakeholder view, with implications that we explore throughout the book. Chapter 2 outlines the basic framework of US corporate governance law. (Experienced lawyers may be tempted to skip this chapter, but I suspect even they may find my take on this topic helpful in understanding the chapters that follow.) Chapter 3 then explains how BCs and PBCs are different from traditional corporations. Together, these two chapters will give us the tools we need to explore the questions we will tackle in the rest of the book.
9. Solomon E. Asch, Social Psychology 450–59 (Oxford University Press 1952).
10. https://www.latimes.com/business/story/2019-09-04/hiltzik-medical-bankruptcy-american-scandal
11. Moddassir Ahmed, Muhammad Rauf, Zahid Mukhtar, & Nasir Ahmad Saeed, “Excessive Use of Nitrogenous Fertilizers: An Unawareness Causing Serious Threats to Environment and Human Health,” 24 Environmental Science and Pollution Research 26893 (Dec. 2017); Artemis Dona & Ioannis S. Arvanitoyannis, “Health Risks of Genetically Modified Foods,” 49 Critical Reviews in Food Science and Nutrition 164, Feb. 2009.
12. Darby Saxbe, “The Social Media Disconnect,” Psychology Today, Feb. 26, 2018, https://www.psychologytoday.com/us/blog/home-base/201802/the-social-media-disconnect (last viewed Aug. 9, 2022).
13. World Bank, “GDP,” last consulted Mar. 31, 2023.
14. https://www.cia.gov/library/publications/the-world-factbook/fields/224.html
15. https://www.epi.org/publication/charting-wage-stagnation/
16. Id.
17. Id.
18. For a discussion of the phenomenon of cohesive groups known as group-think, see Irving L. Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes (2d ed. Houghton Mifflin 1982), and Michael B. Dorff, “The Group Dynamics Theory of Executive Compensation,” 28 Cardozo Law Review 2025 (2007).
19. Frank H. Easterbrook & Daniel R. Fischel, The Economic Structure of Corporate Law 36–39 (Harvard University Press 1991). also Ian B. Lee, “Efficiency and Ethics in the Debate about Shareholder Primacy,” 31 Delaware Corporate Law Journal 533, 537–38 (2006) (explaining this theory); Lynn A. Stout, “Bad and No-So-Bad Arguments for Shareholder Primacy,” 75 Southern California Law Review 1189, 1192–93 (2002) (same).
20. Hannah Zhang, “Dick’s Sporting Goods Will Stop Selling Guns at 440 More Stores,” CNN, Mar. 10, 2020, https://www.cnn.com/2020/03/10/business/dicks-sporting-goods-remove-guns-from-440-stores/index.html (last viewed Sept. 7, 2022).
21. See, e.g., Lucian Ayre Bebchuk, “Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law,” 105 Harvard Law Review 1435, 1492 (1992); David L. Engel, “An Approach to Corporate Social Responsibility,” 32 Stanford Law Review 1 (1979); Walter Werner, “Corporation Law in Search of Its Future,” 81 Columbia Law Review 1611, 1651 (1981) (describing the pragmatist position).
22. Citizens United v. Federal Election Commission, 558 U.S. 310 (2010).
23. Edgar v. MITE Corp., 457 U.S. 624, 645 (1982).
24. John C. Carney, Fiscal Year 2021 Governor’s Recommended Budget, last consulted Mar. 31, 2023. https://budget.delaware.gov/budget/fy2021/documents/operating/introduction.pdf.
25. See, e.g., William L. Cary, “Federalism and Corporate Law: Reflections upon Delaware,” 83 Yale Law Journal 663 (1974).
26. Ralph K. Winter, “State Law, Shareholder Protection, and the Theory of the Corporation,” 6 Journal of Legal Studies 251 (1977).
27. Jill E. Fisch, “Institutional Competition to Regulate Corporations: A Comment on Macey,” 55 Case Western Reserve Law Review 617, 619 (2005).
28. Delaware Division of Corporations, “Annual Report Statistics” (2021), https://corp.delaware.gov/stats/ (last viewed Aug. 10, 2022).
29. Dodge v. Ford Motor Company, 204 Mich. 459, 170 N.W. 668 (Mich. 1919).
30. Id. at 671.
31. Id. at 684.
32. Id.
33. Id.
34. Jeffrey N. Gordon, “The Rise of Independent Directors in the United States, 1950–2005: Of Shareholder Value and Stock Market Prices,” 59 Stanford Law Review 1465, 1511–14 (2007).
35. Peter F. Drucker, The Concept of the Corporation (Transaction 1946); Peter F. Drucker, “They’re Not Employees, They’re People,” Harvard Business Review (Feb. 2002), https://hbr.org/2002/02/theyre-not-employees-theyre-people (last viewed Aug. 10, 2022).
36. Milton Friedman, “The Social Responsibility of Business Is to Increase Its Profits,” New York Times Magazine, Sept. 13, 1970.
37. Id.
38. Michael B. Dorff, Indispensable and Other Myths: Why the CEO Pay Experiment Failed and How to Fix It 18 (University of California Press 2014).
39. Id.
40. Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 955 (Del. 1985). In Unocal, the Delaware Supreme Court held that in considering whether a corporate takeover defense was reasonable in response to the threat posed by a hostile bid (and therefore permitted under Delaware law), the board could consider the threat not only to the company’s shareholders but also to other corporate constituencies. The court defined these other constituencies broadly, as including “creditors, customers, employees, and perhaps even the community generally.”
41. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 176 (1986).
42. eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1 (2010).
43. eBay, 16 A.3d at 34 (internal citation omitted).
44. Even if Professor Stout were correct and shareholder primacy were not the law in Delaware, BCs and PBCs would retain much of their usefulness. Because there is little legal enforcement of shareholder primacy (or, for that matter, of the balancing requirement imposed by BCs and PBCs, as we discuss later in the book), the primary benefits of the BC and PBC forms are (1) cultural, by setting different expectations for managers and investors and (2) reinforcement of the founder’s social values through mechanisms such as periodic reporting on the company’s progress in advancing its social goals and the mandate that the board balances profit against other social goals. These tools would be useful even if Delaware law did not require traditional corporations to focus only on pursuing profits through legal means.
45. Lynn A. Stout, The Shareholder Value Myth 31 (Berrett-Koehler 2012).
46. Id. at 28. Stout makes this point as an argument in favor of latitude, pointing out that few if any charters mandate shareholder primacy. But there she mistakes the default rule, which is shareholder primacy. Companies that do not opt out of shareholder primacy are bound by it under Delaware law.
47. Leo E. Strine Jr., “The Dangers of Denial: The Need for a Clear-Eyed Understanding of the Power and Accountability Structure Established by the Delaware General Corporation Law,” 50 Wake Forest Law Review 761, 768 (2015).
48. Jonathan D. Springer, “Corporate Constituency Statutes: Hollow Hopes and False Fears,” 1999 Annual Survey of American Law 85 (1999); Julian Velasco, “The Fundamental Rights of the Shareholder,” 40 U.C. Davis Law Review 407 (2006).
49. See, e.g., AP Smith Mfg. Co. v. Barlow, 98 A.2d 581 (New Jersey 1953) (approving a company’s charitable donations to Rutgers and Princeton).
50. Larry Fink, “A Sense of Purpose” (2017), https://www.blackrock.com/corporate/investor-relations/2018-larry-fink-ceo-letter.
51. Marc Benioff, “We Need a New Capitalism,” New York Times, Oct. 14, 2019, https://www.nytimes.com/2019/10/14/opinion/benioff-salesforce-capitalism.html.
52. Business Roundtable, “Statement on the Purpose of a Corporation” (2019), https://opportunity.businessroundtable.org/wp-content/uploads/2019/09/BRT-Statement-on-the-Purpose-of-a-Corporation-with-Signatures-1.pdf.
53. Accountable Capitalism Act, S. 3348, 115th Cong. (2018), https://www.warren.senate.gov/imo/media/doc/Accountable%20Capitalism%20Act.pdf
54. Office of Senator Elizabeth Warren, “Warren Introduces Accountable Capitalism Act” (Aug. 15, 2018), https://www.warren.senate.gov/newsroom/press-releases/warren-introduces-accountable-capitalism-act.
55. See, e.g., Lucian A. Bebchuk & Roberto Tallarita, “The Illusory Promise of Stakeholder Governance,” 106 Cornell Law Review 91, 101–102 (2020); J. S. Liptrap, “The Dark Side of Colombia’s Benefit Corporation,” Oxford Business Law Blog (June 8, 2022), https://www.law.ox.ac.uk/business-law-blog/blog/2022/06/dark-side-colombias-benefit-corporation (last viewed August 10, 2022).
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