Berle XIV: Developing a 21st Century Corporate Governance Model
Co-Organizers: Dorothy Lund, Chuck O’Kelley
Hosted by: USC Gould School of Law, Los Angeles CA
March 24 and 25, 2023
The theory of the firm is in flux. Traditional and widely accepted economic theories emphasize the importance of directing fiduciaries to maximize the value of the firm for the benefit of its shareholders. However, a growing number of scholars and policymakers contend that it is time to abandon the shareholder primacy model that has shaped corporate law and governance for the past fifty years. They argue that this model has exacerbated social inequality, the risk of climate change, and other social problems, and should be modified as necessary to both solve these problems and create a sustainable future. A prime candidate to supplement or replace shareholder primacy is some form of stakeholder-centered governance. Indeed, business executives and even investors have begun to emphasize the importance of prioritizing a firm’s stakeholders beyond its shareholders.
Berle XIV brought together scholars and experts from a broad array of disciplines to consider how shareholder primacy should be modified or replaced. Many topics were addressed in this symposium, including the following: On the level of theory, can a stakeholder model be theorized that better ensures the end goal of a fairer and more sustainable future, or will accountability problems and the self-interest of management prove insurmountable? Is stakeholder governance consistent with the contractual or economic theory of the firm? On the level of practice, how could stakeholder governance be implemented in the United States? Who counts as a stakeholder, and why? Could traditional governance functions like the board of directors or executive compensation be harnessed to avoid the problem of runaway agency costs? Can we learn something from other countries that have eschewed shareholder primacy? What should be the role of government in empowering, encouraging, or forcing corporations to become more stakeholder centered?
