This Article argues that the nature of the corporate form coupled with an exclusive focus on shareholder value leads to economically and socially inefficient results. The "profit maximization" view of directors' duties ignores the historical reasons why corporations were given special privileges, such as limited liability, by the state. This narrow view should be replaced with a doctrine of stewardship that imposes a more comprehensive view of the corporation's and directors' responsibility to manage the vast resources held in corporate form. This broader view is consistent not only with the values of a free market economy, but also with modem corporate jurisprudence. It also reflects modem organizational theory that emphasizes the importance of systems thinking, or thinking about the whole rather than just the parts. In the spirit of stewardship, transparency, and self-regulation, this Article recommends an additional securities disclosure requirement that public corporations disclose the impact of major corporate decisions on affected constituencies, including shareholders, employees, customers, suppliers, creditors, communities, governmental entities, and the corporation's management. In this manner, this Article proposes to replace the veil of secrecy with the mantle of stewardship.
Constance E. Bagley & Karen L. Page,
The Devil Made Me Do It: Replacing Corporate Directors' Veil of Secrecy with the Mantle of Stewardship,
San Diego L. Rev.
Available at: https://digital.sandiego.edu/sdlr/vol36/iss4/2