Dawn Following Darkness: An Outcome-Oriented Model for Corporate Governance

33 Pages Posted: 23 Mar 2010  

Martin B. Robins

DePaul University College of Law

Date Written: March, 13 2010

Abstract

This article is an effort to identify changes in the legal standards governing obligations of corporate directors which are likely to prevent – not merely punish - the sorts of catastrophic mistakes by private firms which have led to our recent economic upheaval. The author addresses inadequacies in both present law – particularly the business judgment rule as it applies to large, highly interconnected firms – and pending reform efforts, such as limitations on compensation for executives, and increased proxy access for non-management director candidates. The article’s emphasis is on the need to address outcomes instead of the process-oriented approach of present law and proposed changes. In particular, the author takes what is likely to be a controversial position, of advocating direct responsibility of directors of highly interconnected firms, presenting significant systemic exposure, under certain circumstances, when seriously adverse outcomes befall their firms. Such responsibility would take the form of a reversal of the present burden of proof placed on plaintiffs in actions alleging breach of directors’ duty of care.

Suggested Citation

Robins, Martin B., Dawn Following Darkness: An Outcome-Oriented Model for Corporate Governance (March, 13 2010). Duquesne University Law Review, Vol. 48, 2010. Available at SSRN: https://ssrn.com/abstract=1570111

Martin B. Robins (Contact Author)

DePaul University College of Law ( email )

25 E. Jackson Blvd.
Chicago, IL Cook County 60604-2287
United States

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