Amenable Controls: How Companies Influence Laws, Reputation, and Morals

In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, Forthcoming).

University of Oslo Faculty of Law Research Paper No. 2019-49

Posted: 8 May 2019

See all articles by Roy Shapira

Roy Shapira

Stigler Center, University of Chicago Booth School of Business; Interdiscplinary Center (IDC)

Date Written: May 6, 2019

Abstract

What happens when sustainability concerns clash with the company’s bottom line? On paper, various systems should deter unsustainable behavior: fear of liability (legal sanctions), diminished business opportunities (reputational sanctions), or guilty feelings (moral sanctions). Yet, in reality, companies do not take these legal, reputational, and moral sanctions as given. They rather count on their ability to dilute the expected sanctions. Companies reduce the probability of being caught by controlling the information environment and creating plausible deniability. They are often the ones dictating the public perception of whether they behaved sustainably or not. Companies can also dilute the sanction that is imposed once they are caught, by capturing the regulators, and reducing the guilt associated with immoral behavior. Recognizing that all systems of control can be gamed opens up space for rethinking policy implications, such as designing the legal system in ways that balance the non-legal systems’ areas of malleability.

Keywords: reputation, information avoidance, regulatory capture, role morality, moral licensing

Suggested Citation

Shapira, Roy, Amenable Controls: How Companies Influence Laws, Reputation, and Morals (May 6, 2019). In Beate Sjåfjell and Christopher M. Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (Cambridge University Press, Forthcoming). ; University of Oslo Faculty of Law Research Paper No. 2019-49. Available at SSRN: https://ssrn.com/abstract=3383567

Roy Shapira (Contact Author)

Stigler Center, University of Chicago Booth School of Business ( email )

Walker Hall
Chicago, IL 60637
United States

Interdiscplinary Center (IDC) ( email )

P.O. Box 167
Herzliya, 46150
Israel
972-9-9602410 (Phone)
972-9-9527996 (Fax)

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