The Path of Corporate Law: Of Options Backdating, Derivative Suits, and the Business Judgment Rule

Abstract:     
This article examines a cornerstone doctrine of corporate law, the business judgment rule, in the light of various corrupt practices in large public companies — principally the options backdating scandal. It finds that the rule is an impediment to actions such as shareholder derivative suits that can deter this improper conduct. Recent decisions from Delaware however may indicate a change in the application of that doctrine. The article argues that such an approach should be encouraged and extended so that corporate officials may be more accountable to the public interest.

Number of Pages in PDF File: 44

Keywords: options backdating, derivative suits, business judgment rule

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