Corporate Governance Beyond Economics
Forthcoming, The Corporate Contract in Changing Times: Is the Law Keeping Up? (Steven Davidoff Solomon & Randall Thomas eds., Univ. of Chicago Press)
1 Pages Posted: 25 Sep 2017 Last revised: 25 Jan 2018
Date Written: September 24, 2017
In recent years, changes to state and federal law have increased pressure on corporate law to serve as an ordering mechanism for interests and values beyond economics. On the federal front, two U.S. Supreme Court cases have put existing corporate law in a new quasi-constitutional light. In the landmark decisions of Citizens United v. FEC and Burwell v. Hobby Lobby Stores, Inc., the Supreme Court has pointed to state corporate law as the mechanism for ordering political and religious activity. In addition, Congress, the SEC, and federal courts have been embroiled in battles about the scope and appropriateness of regulating corporate speech and disclosures on topics such as conflict minerals and political expenditures that are driven principally by humanitarian and democratic concerns rather than economic goals. On the state law front, a movement of social entrepreneurs has catalyzed a majority of states to adopt legislation for a new form of business entity — the benefit corporation. The public push for this form of corporate entity harkens back to early American law, permitting businesses to be chartered to pursue a dual mission of profits and a social, religious, or environmental goal.
This chapter examines these developments and their implications, and anticipates future challenges on the horizon, including with respect to corporate commercial speech and freedom of association. Significant issues remain to be worked out in coming years in reconciling the increased social, political, and religious activity of business corporations.
Keywords: corporations, corporate governance, business organizations, benefit corporations, social enterprise, Citizen United, Hobby Lobby, corporate rights, corporate political spending, commercial speech, freedom of association
JEL Classification: K22, P12
Suggested Citation: Suggested Citation