Principles for Publicness
70 Pages Posted: 17 Sep 2014
Date Written: September 1, 2014
What duties does a “public” company owe investors, markets, and society? In the past ten years, Congress has alternately strengthened and diluted the disclosure and corporate governance regime that applies to public companies in the United States, but has never articulated a framework for what it means to be “public,” and how the obligations of “public” companies should reflect the needs of the constituencies whose financial and social interests they affect. As a result, firms fear that becoming public is an impediment to growth, and game gradations of publicness to avoid compliance burdens. In this manuscript, I propose reframing the regulation of public companies under U.S. securities law around three regulatory principles: suitability, efficiency, and representativeness. These principles — and associated tiers of regulation — will enable stock exchanges, investment banks, and other market intermediaries to shepherd companies toward heightened degrees of public exposure and accountability as their capital-raising needs evolve.
Keywords: public company, corporate governance, corporate duties, suitability, efficiency, representativeness
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