ANEIL KOVVALI, University of Chicago Law School
Email: kovvali@uchicago.edu

The American economy has lurched from crisis to crisis for over a decade, enduring long stretches of high unemployment, market dysfunction, and ineffective government policy. Despite the enormous scale of this suffering and disruption, the full implications of the experience have not been absorbed by the corporate governance literature. Corporate law’s focus on delivering financial returns to shareholders works reasonably well in a robust economy, when markets function effectively and align shareholder incentives with the goal of maximizing social wealth. But these tidy mechanisms fail in periods of macroeconomic stress, when markets send faulty signals and firms pursuing short-term shareholder profits can destroy social wealth. The layoffs or price increases often desired by shareholders can be useful in a healthy economic environment, as they cause resources to be allocated more efficiently to higher-value uses, and competitive markets prevent harm from falling on workers or consumers. But the same maneuvers can be destructive when the economy is afflicted by unemployment or inflation. Revising corporate governance arrangements so that companies focus less on maximizing short term shareholder profits during crises can thus be a useful tool for managing economic problems and improving outcomes.

This Article begins the theoretical and practical work of adapting corporate governance to periods of economic crisis. After demonstrating that the assumptions that have driven corporate law debates depend on macroeconomic context, the Article shows that correcting those assumptions could make corporate governance a powerful tool for managing crises. These insights offer a useful framework for evaluating measures undertaken by businesses, investors, and the government in response to the COVID-19 crisis, while suggesting new avenues for action.

MARC I. STEINBERG, Southern Methodist University - Dedman School of Law
Email: MSTEINBE@SMU.EDU

A recurrent theme in corporate law is the presence of directors and officers owing fiduciary duties of care and loyalty to the respective companies they serve. Although not as visible in the securities law setting, concepts of fiduciary duty-like obligations arise with some frequency. While the rigorous application of fiduciary standards was applied in days of yesteryear, its adherence today largely is nonexistent. Nonetheless, courts continue to embrace language in their opinions that emphasizes the continued presence of fiduciary duty standards. Reality, however, strikes a very different key. In fact, standards of fiduciary duty have become greatly diluted in the corporate/securities setting — to the degree that they should no longer be characterized as being fiduciary-like. This article by the author of Rethinking Securities Law (Oxford University Press 2021) (awarded by American Book Fest the Best Law Book of 2021) explores this glaring gap between rhetoric and reality and proffers an alternative approach aligned with the present-day actuality of so-called fiduciary principles. The article thus explores the illusion that courts continue to embrace. First, the article addresses the multi-faceted contexts in which state courts cling to fiduciary duty principles in their rhetoric, yet apply far more lax standards in their liability assessments. Thereafter, a similar phenomenon is analyzed with respect to the application of the federal securities laws. The last part of the article advocates for the recognition of reality rather than imaginary characterizations, setting forth a cognizable framework for determining the appropriate liability thresholds that should be implemented.

BAMDAD ATTARAN, DLA Piper (Canada) LLP, University of Ottawa, Michigan State University, College of Law
Email: bamdadattaran@gmail.com

This article addresses the question whether directors’ duty of care is a fiduciary duty. In Delaware and throughout much of the United States, courts and practitioners describe directors’ duty of care as a fiduciary duty. By contrast, Canada and most other common law jurisdictions do not describe directors’ duty of care as a fiduciary duty. Two recent decisions by the Supreme Court of Canada suggest a move by Canadian courts towards recognizing a fiduciary duty of care. In response to these decisions, this article argues that styling directors’ duty of care as a fiduciary duty is not persuasive in the Canadian context. Through a comparative analysis of corporate law in Canada and the United States, this article demonstrates that the Delaware approach to styling directors’ duty of care misconstrues the boundaries of fiduciary law. Furthermore, the Delaware approach obfuscates the important distinction between the duty of care and fiduciary duty of loyalty. In response to these concerns, the article recommends amendments to s.122 of the Canada Business Corporations Act, which identify the important distinction between directors’ duty of care and the fiduciary duty of loyalty.

PAUL B. MILLER, Notre Dame Law School
Email: paul.miller@nd.edu

American law is notoriously solicitous of property owners’ testamentary freedom. Interpretive theorists cannot but acknowledge its centrality to enabling law. Yet freedom of testamentary disposition has attracted criticism on normative grounds for centuries. Indeed, it is widely viewed as one of the most tenuous of incidents of private ownership.

This chapter examines leading arguments offered in defense of wide testamentary freedom of the sort found in American trust law. Viewed, as it has been, within conventional frames of the morality of property – its central preoccupations with autonomy, need, scarcity, and equality – testamentary freedom is widely considered morally suspect. And, indeed, as I explain, arguments from property conventions, autonomy, social utility, and obligations of provision each fail to show that laws enabling wide testamentary freedom are morally defensible.

In the chapter I suggest that testamentary freedom can be defended more robustly on the footing of the morality of gift relationships, with particular attention to the value of testamentary benefaction in enabling the expression of moral motivation, the practice of virtue, and realization of goods essential to the flourishing of a testator’s intended beneficiaries. An advantage of this approach is that it recognizes moral complexity, allowing one to appreciate the value of dispositions that track the focal moral and legal sense of benefactions as gifts, while at the same time pinpointing ways in which some dispositions prove morally defective as gifts despite their legal validity (e.g., spiteful or malicious disinheritance, wasteful or harmful inheritance) and accommodating side constraints responsive to concerns surfaced within the morality of property (e.g., regarding the interests of future generations, and the impact of inheritance on distributive justice).