Excessive Corporate Risk-Taking and the Decline of Personal Blame

48 Pages Posted: 24 Jan 2015 Last revised: 9 Feb 2016

Date Written: December 13, 2015


Government agencies and prosecutors are being criticized for seeking so few indictments against individuals in the wake of the 2008-09 financial crisis and its resulting banking failures. This article analyzes why — contrary to a longstanding historical trend — personal liability may be on the decline, and whether agencies and prosecutors should be doing more. The analysis confronts fundamental policy questions concerning changing corporate and social norms. The public and the media perceive the crisis’s harm as a “wrong” caused by excessive risk-taking. But that view can be too simplistic, ignoring the reality that firms must take greater risks to try to innovate and create value in the increasingly competitive and complex global economy. This article examines how law should control that risk-taking and internalize its costs without impeding broader economic progress, focusing on two key elements of that inquiry: the extent to which corporate risk-taking should be regarded as excessive, and the extent to which personal liability should be used to control that excessive risk-taking.

Note: Previously titled Liability for Financial Failure: Corporate Risk-Taking and the Decline of Personal Blame

Suggested Citation

Schwarcz, Steven L., Excessive Corporate Risk-Taking and the Decline of Personal Blame (December 13, 2015). Emory Law Journal, Vol. 65, No. 2, Duke Law School Public Law & Legal Theory Series No. 2015-9, Available at SSRN: https://ssrn.com/abstract=2553511 or http://dx.doi.org/10.2139/ssrn.2553511

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)

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