Does it matter if corporate leaders pursue a broader, social corporate purpose rather than a narrow, shareholder-centric one, and can legal and governance levers influence their choice?
Theoretically—and limited by substitution, regulation, and
legitimacy—socially-minded corporate decision-making can benefit society
ex post, while commitment to either purpose may be required to motivate
various constituencies’ contributions ex ante. Empirically, however,
even structural measures like employee co-determination hardly have
detectable effects, let alone mere exhortations such as those in
(unenforceable) nuances of (misunderstood) fiduciary duties. Many
arguments for or against (particular) corporate purpose(s) are
fallacies, red herrings, or, for empirics, cherry-picking.
ECGI
© ICGN - International Corporate Governance Network
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