Deconstructing Corporate Governance: Director Primacy Without Principle?
64 Pages Posted: 13 Dec 2011 Last revised: 28 Dec 2011
Date Written: 2011
If profit-maximizing is not enforced by corporate law, why does it nonetheless happen as a matter of almost overwhelming routine in today’s corporate reality? If indeed, director primacy is absolute and our theoretical models are all reliant on protolegal variables to explain general investor confidence ex-ante-investment despite the lack of director accountability ex-post-investment, then how can director primacy be understood and explained as a principled and, thus, just corporate governance structure in the first place? Or is director primacy not only absolute, but also without principle?
This Article provides a roadmap for purposes of answering this inquiry. Part II further describes the problem left unsolved to date — namely, that we currently use largely unexplained and, thus, unaccounted-for protolegal variables to explain and predict the decisionmaking behavior of corporate directors. Part III essays to explain why — conceptually and normatively — we appear to need, and thus develop, distributional, ergo macrotheoretical, models of the firm in the first place. Those models place the decisionmaking behavior of corporate directors in the larger context of our social polity. They inevitably address the social benefits and costs of doing business in the corporate form and the resultant questions of sociopolitical legitimacy and allocative and distributive justice of the corporate endeavor. Parts IV and V survey and evaluate the more recent interest of the legal academia in the co-existence of (corporate) law and norms and the latter’s impact on (and, maybe, complete control over) the former — the so-called "law and norms" literature.
Keywords: corporate governance, director primacy
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