The “Value” of a Public Benefit Corporation

U of Penn, Inst for Law & Econ Research Paper No. 20-54

Forthcoming in Research Handbook on Corporate Purpose and Personhood (Elizabeth Pollman & Robert B. Thompson, eds., Elgar)

European Corporate Governance Institute - Law Working Paper No. 585/2021

30 Pages Posted: 16 Oct 2020 Last revised: 14 May 2021

See all articles by Jill E. Fisch

Jill E. Fisch

University of Pennsylvania Law School - Institute for Law and Economics; European Corporate Governance Institute

Steven Davidoff Solomon

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy; European Corporate Governance Institute (ECGI)

Date Written: April 14, 2021

Abstract

We examine the “value” a PBC form provides for publicly-traded corporations. We analyze the structure of the PBC form and find that other than requiring a designated social purpose it does not differ significantly in siting control and direction with shareholders. We also examine the purpose statements in the charters of the most economically significant PBCs. We find that, independent of structural limitations on accountability, these purpose statements are, in most cases, too vague and aspirational to be legally significant, or even to serve as a reliable checks on PBC behavior. We theorize, and provide evidence, that without a legal or structural tool for binding a PBC to specific social objectives, the operational decisions of the publicly traded PBC may be subject to change according to the vision and preferences of individual officers, directors and shareholders. Our conclusions provide support for a more defined and enforceable PBC purpose statement for publicly-traded PBCs. Otherwise, publicly-traded PBCs are likely to operate no differently than traditional, publicly-traded corporations.

Keywords: Public benefit corporations, B. corp., corporations, business organizations, corporate governance, Delaware PBC statute, corporate social purpose, stakeholder capitalism, corporate purpose, accountability mechanisms, ESG, social benefit, wealth maximization, social responsibility

JEL Classification: D60, D64, G34, K10, K20, L21, L32

Suggested Citation

Fisch, Jill E. and Davidoff Solomon, Steven, The “Value” of a Public Benefit Corporation (April 14, 2021). U of Penn, Inst for Law & Econ Research Paper No. 20-54, Forthcoming in Research Handbook on Corporate Purpose and Personhood (Elizabeth Pollman & Robert B. Thompson, eds., Elgar), European Corporate Governance Institute - Law Working Paper No. 585/2021, Available at SSRN: https://ssrn.com/abstract=3712532

Jill E. Fisch (Contact Author)

University of Pennsylvania Law School - Institute for Law and Economics; European Corporate Governance Institute ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-746-3454 (Phone)
215-573-2025 (Fax)

Steven Davidoff Solomon

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

University of California, Berkeley - Berkeley Center for Law, Business and the Economy ( email )

Berkeley, CA 94720-7200

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
298
Abstract Views
1,154
rank
129,409
PlumX Metrics