Say on Purpose: Lessons from Chinese Corporate Charters

Forthcoming, Journal of Corporate Law Studies

35 Pages Posted: 21 May 2019

See all articles by Li-Wen Lin

Li-Wen Lin

University of British Columbia (UBC), Faculty of Law

Date Written: March 28, 2019

Abstract

What is the purpose of the corporation? The debate has continued for a long time without a clear answer partly because corporate law is often silent or ambiguous on the purpose of the corporation. The debate is largely academic and has limited dialogues with corporations that manage business in the real world. If corporations themselves articulate the purpose in their constitutive documents, it might be helpful to resolve the corporate purpose controversy. China offers a valuable empirical setting to examine how corporations formally state the purpose in their corporate charters. The empirical findings in this article show that the purpose clause in the articles of incorporation is not static but evolving with institutional and organizational demands. However, the purpose clause serves only a signaling or marketing function because of external and intrinsic constraints.

Keywords: corporate purpose, corporate social responsibility, shareholder wealth maximization, contract, articles of incorporation

Suggested Citation

Lin, Li-Wen, Say on Purpose: Lessons from Chinese Corporate Charters (March 28, 2019). Forthcoming, Journal of Corporate Law Studies. Available at SSRN: https://ssrn.com/abstract=3382072

Li-Wen Lin (Contact Author)

University of British Columbia (UBC), Faculty of Law ( email )

1822 East Mall
Vancouver, British Columbia V6T 1Z1
Canada

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