Public Primacy in Corporate Law

Abstract

This Article, prepared for the XIV Berle Symposium, explores the malleability of agency theory by showing that it could be used to justify a “public primacy” standard for corporate law that would direct fiduciaries to promote the value of the corporation for the benefit of the public. Employing agency theory to describe the relationship between corporate management and the broader public sheds light on aspects of firm behavior, as well as the nature of state contracting with corporations. It also provides a lodestar for a possible future evolution of corporate law and governance: minimize the agency costs created by the divergence of interests between management and the public.

Keywords: corporate law, corporate governance, corporate social responsibility, CSR, fiduciary duties, shareholder primacy, shareholder value maximization, ESG, stakeholders, law and economics, agency theory

JEL Classification: G30, G38, K10, K20, K22