Corporate Social Responsibility vs. Shareholder Value Maximization: Through the Lens of Hard and Soft Law

50 Pages Posted: 25 May 2018 Last revised: 6 Oct 2019

See all articles by Min Yan

Min Yan

City University London; Queen Mary University of London

Date Written: May 22, 2018


Even with a significant increase in the number of firms around the world engaging in corporate social responsibility (CSR), many people still perceive CSR as a voluntary commitment and shareholder value maximization (SVM) as a mandatory requirement. This paper borrows the concept of hard law and soft law in terms of coerciveness and overturns the stereotype that SVM is a hard-law constraint and CSR a soft-law constraint. The paper first demonstrates that directors of the board are not obliged to maximize shareholder value even in the Anglo-American jurisdictions where shareholder primacy culture is more dominant. Next, the paper critically discusses an enforceable regulatory regime for CSR. After studying various countries’ practices, this paper highlights three main forms of the hard-law approach for CSR: namely through (i) enacting mandatory CSR laws to directly promote socially responsible behavior; (ii) defining minimum standards for corporate behavior to deter socially irresponsible behavior, and/or (iii) mandatory disclosure of CSR-related issues. The conventional (economic) justification for CSR is subsequently challenged, i.e., why should we align CSR with SVM after the above misunderstandings are corrected. More importantly, in addition to overcoming the weakness of soft law’s non-coerciveness, the hard-law approach will also provide additional grounds for furthering CSR.

Keywords: Corporate social responsibility (CSR), shareholder value maximization (SVM), hard-law approach, mandatory CSR, regulatory initiative, CSR reporting

Suggested Citation

Yan, Min, Corporate Social Responsibility vs. Shareholder Value Maximization: Through the Lens of Hard and Soft Law (May 22, 2018). Northwestern Journal of International Law & Business (2019) 40 (Forthcoming), Queen Mary School of Law Legal Studies Research Paper No. 280/2018, Available at SSRN:

Min Yan (Contact Author)

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

Queen Mary University of London ( email )

Mile End Rd
Bancroft Building
London, London E1 4NS
United Kingdom


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