What is Corporate Law's Place in Promoting Societal Welfare?: An Essay in Honor of Bill Klein

7 Pages Posted: 27 Jan 2005 Last revised: 9 Oct 2017

See all articles by Randall S. Thomas

Randall S. Thomas

Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)


This is a short essay on what should be the fundamental criterion used to evaluate corporate law. I argue that the overall goal of good corporate law should be to assist private parties to create wealth for themselves and the economy in a manner that does not inflict uncompensated negative externalities upon third parties. Private businesses that produce goods and services should be encouraged by the state because creating greater wealth is generally beneficial to society. Corporate law can act as a helpful precondition for faster economic growth by protecting the parties' expectations, encouraging savings and investment, reducing transaction costs, minimizing agency costs, and compensating third parties for any harm that they may suffer from this business activity.

Keywords: Corporate Law, Societal Welfare

Suggested Citation

Thomas, Randall S., What is Corporate Law's Place in Promoting Societal Welfare?: An Essay in Honor of Bill Klein. Berkeley Business Law Journal, Vol. 2, p. 135, Vanderbilt Law and Economics Research Paper No. 05-03, Available at SSRN: https://ssrn.com/abstract=655228

Randall S. Thomas (Contact Author)

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

European Corporate Governance Institute (ECGI)

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

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