Download this Paper Open PDF in Browser

Preserving the Corporate Superego in a Time of Activism: An Essay on Ethics and Economics

47 Pages Posted: 20 Sep 2016  

John C. Coffee Jr.

Columbia Law School; European Corporate Governance Institute (ECGI); American Academy of Arts & Sciences

Date Written: September 16, 2016

Abstract

This essay focuses on the impact of recent changes in corporate governance on ethical behavior within the public corporation. It argues that a style of corporate behavior — one characterized by a risk tolerant, even reckless, pursuit of short-term profits and a disregard for the interests of non-shareholder constituencies — is attributable in significant part to recent changes in corporate governance, including the rise of hedge fund activism, greater use of incentive compensation, and the appearance of blockholder directors. It then surveys feasible responses intended to strengthen the role of the boards as the corporation’s conscience and superego. Given the difficulty of reform, it predicts that the problems identified are likely to get worse before they get better.

Keywords: activists, blockholder director, CEO compensation, corporate social responsibility, hedge funds, incentive compensation, wolfpack

JEL Classification: G01, G10, G30, G32

Suggested Citation

Coffee, John C., Preserving the Corporate Superego in a Time of Activism: An Essay on Ethics and Economics (September 16, 2016). Available at SSRN: https://ssrn.com/abstract=2839388 or http://dx.doi.org/10.2139/ssrn.2839388

John C. Coffee Jr. (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States
212-854-2833 (Phone)
212-854-7946 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

American Academy of Arts & Sciences

136 Irving Street
Cambridge, MA 02138
United States

Paper statistics

Downloads
253
Rank
101,735
Abstract Views
752