The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities

by Kent Greenfield

When used in conjunction with corporations, the term “public” is misleading. Anyone can purchase shares of stock, but public corporations themselves are uninhibited by a sense of societal obligation or strict public oversight. In fact, managers of most large firms are prohibited by law from taking into account the interests of the public in decision making, if doing so hurts shareholders. But this has not always been the case, as until the beginning of the twentieth century, public corporations were deemed to have important civic responsibilities.

With The Failure of Corporate Law, Kent Greenfield hopes to return corporate law to a system in which the public has a greater say in how firms are governed. Greenfield maintains that the laws controlling firms should be much more protective of the public interest and of the corporation’s various stakeholders, such as employees. Only when the law of corporations is evaluated as a branch of public law—as with constitutional law or environmental law—will it be clear what types of changes can be made in corporate governance to improve the common good. Greenfield proposes changes in corporate governance that would enable corporations to meet the progressive goal of creating wealth for society as a whole rather than merely for shareholders and executives.

Genres: Law

300 pages, Hardcover

First published January 1, 2006

About the author

Kent Greenfield is Professor of Law and Law Fund Research Scholar at Boston College Law School, where he teaches and writes in the areas of business law, constitutional law, decision making theory, legal theory, and economic analysis of law. He is the former Chair of the Section on Business Associations of the American Association of Law Schools, and a former clerk to Justice David Souter on the United States Supreme Court.

Greenfield is the author of THE MYTH OF CHOICE: PERSONAL RESPONSIBILITY IN A WORLD OF LIMITS (forthcoming, Yale 2011). He is also the author of the book THE FAILURE OF CORPORATE LAW, published by University of Chicago Press, which has been called “simply the best and most well-reasoned progressive critique of corporate law yet written.” The Law and Politics Book Review said that “it merits a place alongside Berle and Means, [and] Easterbrook and Fischel.” He writes frequently for the Huffington Post.

Reviews

[Kathryn · Rating 4 out of 5]

Instead of approaching corporate law from a standpoint limited by the way things ARE, Greenfield explores the way that things could be through basic ethical and philosophical frameworks...while certainly not for everyone, it is an interesting thought experiment for anyone who has ever thought that companies have a positive obligation to consider not just shareholders, but stakeholders as well.

[Adam Winkler · Rating 5 out of 5]

An intelligent and thoughtful challenge to the prevailing corporate law dogma.