How Twitter Pushed Stakeholders Under The Bus

Forthcoming, Stanford Journal of Law, Business, and Finance, Volume 28, 2023
Harvard Law School John M. Olin Center Discussion Paper No. 1102
Harvard Law School Program on Corporate Governance Working Paper 2023-1

European Corporate Governance Institute - Law Working Paper No. 704/2023

42 Pages Posted: 24 Jan 2023 Last revised: 8 Apr 2024

See all articles by Lucian A. Bebchuk

Lucian A. Bebchuk

Harvard Law School; European Corporate Governance Institute (ECGI); National Bureau of Economic Research (NBER)

Kobi Kastiel

Tel Aviv University - Buchmann Faculty of Law; Harvard Law School, Program on Corporate Governance; European Corporate Governance Institute (ECGI)

Anna Toniolo

Harvard University - Harvard Law School

Date Written: January 19, 2023

Abstract

This study focusses on the acquisition of Twitter by Elon Musk. Our analysis indicates that when negotiating the sale of their company to Musk, Twitter’s leaders chose to disregard the interests of the company’s stakeholders and to focus exclusively on the interests of shareholders and the corporate leaders themselves. In particular, Twitter’s corporate leaders elected to push under the bus the interests of company employees, as well as the mission statements and core values to which Twitter had pledged allegiance for years.

Our analysis can inform the heated debates on corporate stakeholders and their treatment by corporate leaders. Our findings indicate that, contrary to the predictions of the implicit promises and team production theories of Coffee (1986), Shleifer-Summers (1988) and Blair-Stout (1999), corporate leaders selling their company should not be expected to look after the interests of stakeholders. In addition, rather than supporting the stakeholder governance, our findings also support the agency critique of stakeholder governance (Bebchuk and Tallarita (2020)), which stresses that corporate leaders have incentives not to serve stakeholders beyond what would serve shareholder value. Finally, our findings are consistent with the view that corporate mission and purpose statements are mostly for show.

This paper is part of a larger research project of the Harvard Law School Corporate Governance on stakeholder capitalism and stakeholderism. Other parts of this research project include The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita, Will Corporations Deliver Value to All Stakeholders? by by Lucian A. Bebchuk and Roberto Tallarita, For Whom Corporate Leaders Bargain by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita, Stakeholder Capitalism in the Time of COVID by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita, The Perils and Questionable Promise of ESG-Based Compensation by Lucian A. Bebchuk and Roberto Tallarita, and Does Enlightened Shareholder Value Add Value? by Lucian A. Bebchuk, Kobi Kastiel, and Roberto Tallarita.

Keywords: stakeholders, stakeholder capitalism, stakeholder governance, corporate social responsibility, corporate purpose, Twitter, Elon Musk

JEL Classification: D21, G32, G34, G38, K22

Suggested Citation

Bebchuk, Lucian A. and Kastiel, Kobi and Toniolo, Anna, How Twitter Pushed Stakeholders Under The Bus (January 19, 2023). Forthcoming, Stanford Journal of Law, Business, and Finance, Volume 28, 2023
Harvard Law School John M. Olin Center Discussion Paper No. 1102
Harvard Law School Program on Corporate Governance Working Paper 2023-1
, European Corporate Governance Institute - Law Working Paper No. 704/2023, Available at SSRN: https://ssrn.com/abstract=4330393 or http://dx.doi.org/10.2139/ssrn.4330393

Lucian A. Bebchuk (Contact Author)

Harvard Law School ( email )

Cambridge, MA 02138
United States
617-495-3138 (Phone)
617-812-0554 (Fax)

HOME PAGE: http://www.law.harvard.edu/faculty/bebchuk/

European Corporate Governance Institute (ECGI) ( email )

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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Kobi Kastiel

Tel Aviv University - Buchmann Faculty of Law ( email )

Ramat Aviv
Tel Aviv, 69978
Israel

HOME PAGE: http://https://en-law.tau.ac.il/profile/kastiel

Harvard Law School, Program on Corporate Governance ( email )

1575 Massachusetts
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

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

Anna Toniolo

Harvard University - Harvard Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

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