The Corporate Immune System: Governance from the Inside Out
Omari Scott Simmons
Wake Forest University School of Law
April 29, 2013
University of Illinois Law Review, Forthcoming
Wake Forest Univ. Legal Studies Paper No. 2263552
The “Corporate Immune System” (CIS) is an outgrowth of an evolutionary trend reflecting firms’ adaptation to challenges including growing corporate complexity, threats to corporate value, and political compromise. Similar to biological immune systems, corporations have adopted a range of internal mechanisms to ward off threats. The CIS performs an internal regulatory function that lowers monitoring costs for government regulators through internal mechanisms such as a monitoring board, compliance and risk management systems, compensation, and an enhanced chief legal officer (CLO) role. It complements external corporate governance strategies: shareholder empowerment, markets, litigation, gatekeepers, and top-down public regulation. Today’s corporate boards are much more informed, organized, skilled, and accountable than their historical antecedents. Although far from perfect, they continue to evolve and improve. The CIS, recognizing the potential of collaborative inside‐out reforms in the corporate arena is, on balance, a promising development. But this trend also raises concerns that merit further discussion.
Number of Pages in PDF File: 40
Keywords: corporate law, corporate governance, corporations, business, Dodd-Frank, executive compensation, general counsel, compliance, risk, directors, immune system, organization, new governance, operations, Delaware, SECAccepted Paper Series
Date posted: May 12, 2013 ; Last revised: June 11, 2013
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