New Principles, New Policies

in The Failure of Corporate Law

Published by University of Chicago Press

Published in print February 2007 | ISBN: 9780226306933
Published online March 2013 | e-ISBN: 9780226306988 | DOI:
New Principles, New Policies

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Corporate law operates around the premise that corporations have broad powers but only a limited role: they are entities that have as their primary objective the making of money, and not much else is expected or required of them. Unlike mainstream corporate theory, which simply assumes that existing policies produce net social welfare, this chapter explicitly uses society's well-being as the goal, and then derives a set of principles and policies for corporate law. It discusses five regulatory principles that are rational, practical, and rooted in the protection of the public good. First, the ultimate purpose of corporations should be to serve the interests of society as a whole. Second, corporations are distinctively able to contribute to the societal good by creating financial prosperity. Third, corporate law should further the first two principles. Fourth, a corporation's wealth should be shared fairly among those who contribute to its creation. Fifth, participatory, democratic corporate governance is the best way to ensure the sustainable creation and equitable distribution of corporate wealth.

Keywords: corporate law; corporations; corporate theory; social welfare; well-being; public good; corporate governance; corporate wealth; regulatory principles

Chapter.  12169 words. 

Subjects: Company and Commercial Law

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