Edited by Benton E. Gup
Chapter 5: Regulating corporate governance in the public interest: the case of systemic risk
There has long been a debate whether corporate governance law should require some duty to the public. The accepted wisdom is not to require such a duty – that corporate profit maximization provides jobs and other public benefits that exceed any harm. This is especially true, the argument goes, because imposing specific regulatory requirements and making certain actions illegal or tortious – what I will call “regulating substance,” in contrast to “regulating governance” – can mitigate the harm without unduly impairing corporate wealth production. Whether that is true in other contexts, I question if it is true in the context of systemic economic harm. My examination is based in part on a separate article and also parallels the efforts of a working group (which I chair) of Fellows of the American College of Bankruptcy, which is examining the same question under the laws of various nations worldwide.
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