40 Pages Posted: 12 May 2013 Last revised: 11 Jun 2013
Date Written: April 29, 2013
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.
Keywords: corporate law, corporate governance, corporations, business, Dodd-Frank, executive compensation, general counsel, compliance, risk, directors, immune system, organization, new governance, operations, Delaware, SEC
Suggested Citation: Suggested Citation
Simmons, Omari Scott, The Corporate Immune System: Governance from the Inside Out (April 29, 2013). University of Illinois Law Review, Forthcoming; Wake Forest Univ. Legal Studies Paper No. 2263552. Available at SSRN: https://ssrn.com/abstract=2263552