University Disentanglement: Toward a Theory of University Governance

Abstract

As universities face mounting pressure to divest from controversial industries and navigate evolving legal standards, their lack of a coherent governance framework exposes them to significant risks that corporations, with established governance theories, can better mitigate. This Article argues that universities' distinctive and under-theorized nature as business entities leads to legal and ethical ambiguities, particularly in "university disentanglement"-the process of deciding whether to sever financial or operational ties with entities or ideas potentially conflicting with institutional values. Without a structured approach to such critical decision-making, universities are left vulnerable to heightened business risks, elevated agency costs, and substantial legal liabilities. a roadmap for legal reforms that can better accommodate the complex nature of noncorporate governance.

Keywords: University Governance, Disentanglement, Divestment, Ethical Decision-Making, Utilitarianism, Deontological Ethics, Virtue Ethics, Rawlsian Justice, Social Responsibility, Higher Education, Moral Philosophy, Financial Ethics, Institutional Autonomy, Corporate Governance, Sustainability, Human Rights, Climate Change, Ethical Investments, Public Trust

JEL Classification: K22, K32, L31, M14, Q56, A22, I23