The “Value” of a Public Benefit Corporation
Forthcoming in Research Handbook on Corporate Purpose and Personhood (Elizabeth Pollman & Robert B. Thompson, eds., Elgar)
30 Pages Posted: 16 Oct 2020 Last revised: 14 May 2021
Date Written: April 14, 2021
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: Suggested Citation