Corporate governance "reform" and the new corporate social responsibility

University of Pittsburgh Law Review

Volumn 62, Issue 4, 2001, Pages 605-647

  Branson, Douglas M ^a  

^a NONE

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EID: 0345880988     PISSN: 00419915     EISSN: None     Source Type: Journal    
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References (131)

1. See generally ADOLF A. BERLE & GARDINER C. MEANS, THE MODERN CORPORATION AND PRIVATE PROPERTY (1932).
2. New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921).
3. See, e.g., 17 C.F.R. § 240.14a-9 (2001).
4. Under the proxy rules, because the SEC's mandate is very broad, a number of courts have held that a rule 14a-9 claim may be grounded on mere negligence. See, e.g., Herskowitz v. Nutri/Sys., Inc., 857 F.2d 179, 189-90 (3d Cir. 1988); Wilson v. Great Am. Indus., Inc., 855 F.2d 987, 995 (2d Cir, 1988).
5. In fact, with such a passive, rubber stamp board of directors why have meetings at all? A device that gained currency and stayed in vogue well into the 1960s was the "executive committee" of the board of directors. For the lengthy intervals between meetings, the full board delegated the full range of its powers, subject to a few statutory limits on delegations, to a committee of three or so insiders. Thus, the corporate president, the executive vice-president and, perhaps, the treasurer would have the power of the full board of directors, save perhaps the power to declare dividends, recommend a merger, or set before the shareholders amendments to the corporate charter.
6. JOHN KENNETH GALBRAITH, AMERICAN CAPITALISM: THE CONCEPT OF COUNTERVAILING POWER (1952).
7. Id. at 131.
8. Id. at 115.
9. Id. at 117.
10. Id. at 126.
11. Id. at 136.
12. JOHN KENNETH GALBRAITH, THE NEW INDUSTRIAL STATE (1967).
13. Id. at 70-71.
14. Id. at 111.
15. Id. at 289-90.
16. JOHN KENNETH GALBRAITH, ECONOMICS AND THE PUBLIC PURPOSE 318-19 (1973).
17. See, e.g., JOHN KENNETH GALBRAITH, LETTERS TO KENNEDY (1998); JOHN KENNETH GALBRAITH, A CHINA PASSAGE (1973); JOHN KENNETH GALBRAITH, AMBASSADOR'S JOURNAL: A PERSONAL ACCOUNT OF THE KENNEDY YEARS (1969). His novels include JOHN KENNETH GALBRAITH, TRIUMPH (1968) and JOHN KENNETH GALBRAITH, A TENURED PROFESSOR (1991).
18. See, e.g., JOHN KENNETH GALBRAITH, LETTERS TO KENNEDY (1998); JOHN KENNETH GALBRAITH, A CHINA PASSAGE (1973); JOHN KENNETH GALBRAITH, AMBASSADOR'S JOURNAL: A PERSONAL ACCOUNT OF THE KENNEDY YEARS (1969). His novels include JOHN KENNETH GALBRAITH, TRIUMPH (1968) and JOHN KENNETH GALBRAITH, A TENURED PROFESSOR (1991).
19. See, e.g., JOHN KENNETH GALBRAITH, LETTERS TO KENNEDY (1998); JOHN KENNETH GALBRAITH, A CHINA PASSAGE (1973); JOHN KENNETH GALBRAITH, AMBASSADOR'S JOURNAL: A PERSONAL ACCOUNT OF THE KENNEDY YEARS (1969). His novels include JOHN KENNETH GALBRAITH, TRIUMPH (1968) and JOHN KENNETH GALBRAITH, A TENURED PROFESSOR (1991).
20. See, e.g., JOHN KENNETH GALBRAITH, LETTERS TO KENNEDY (1998); JOHN KENNETH GALBRAITH, A CHINA PASSAGE (1973); JOHN KENNETH GALBRAITH, AMBASSADOR'S JOURNAL: A PERSONAL ACCOUNT OF THE KENNEDY YEARS (1969). His novels include JOHN KENNETH GALBRAITH, TRIUMPH (1968) and JOHN KENNETH GALBRAITH, A TENURED PROFESSOR (1991).
21. See, e.g., JOHN KENNETH GALBRAITH, LETTERS TO KENNEDY (1998); JOHN KENNETH GALBRAITH, A CHINA PASSAGE (1973); JOHN KENNETH GALBRAITH, AMBASSADOR'S JOURNAL: A PERSONAL ACCOUNT OF THE KENNEDY YEARS (1969). His novels include JOHN KENNETH GALBRAITH, TRIUMPH (1968) and JOHN KENNETH GALBRAITH, A TENURED PROFESSOR (1991).
22. See David Ratner, The Government of Business Corporations: Critical Reflections on the Rule of "One Share, One Vote," 56 CORNELL L. REV. 1 (1970).
23. Ironically, fifteen years later, at the height of the takeover boom, and never much concerned with being disingenuous, corporate America sang exactly the opposite tune. To defend against hostile takeovers, and often to protect their jobs, salaries and perks, corporate managers caused their companies to authorize "super voting stock," shares with heavily weighted voting power (five or ten votes rather than one vote per share). The managers then caused the issuance of those shares to friendly sets of hands, such as founding family members, loyal employees, or loyal shareholders (say, those who had held shares for five or more years). The SEC tried to rule against dual class capitalization, but the Business Roundtable took the SEC to court and won. A federal appeals court held that, under its mandate to regulate principally by requiring disclosure, the SEC had no power to outlaw certain classes or features of corporate stock, a matter principally of state law in the United States corporate law scheme.
24. Compare Norton E. Long, The Corporation, Its Satellites, and the Local Community, in THE CORPORATION IN MODERN SOCIETY 202 (E. Mason ed., 1960) (public interest directors form the communities in which the corporation operates), with Detlev Vagts, Reforming the "Modern" Corporation: Perspectives From the German, 80 HARV. L. REV. 23, 50-53 (1966) (examination of German two-tiered boards). In 1940, William O. Douglas advocated use of full time professionals as public interest directors. WILLIAM O. DOUGLAS, DEMOCRACY AND FINANCE 52-53 (1940).
25. Compare Norton E. Long, The Corporation, Its Satellites, and the Local Community, in THE CORPORATION IN MODERN SOCIETY 202 (E. Mason ed., 1960) (public interest directors form the communities in which the corporation operates), with Detlev Vagts, Reforming the "Modern" Corporation: Perspectives From the German, 80 HARV. L. REV. 23, 50-53 (1966) (examination of German two-tiered boards). In 1940, William O. Douglas advocated use of full time professionals as public interest directors. WILLIAM O. DOUGLAS, DEMOCRACY AND FINANCE 52-53 (1940).
26. Compare Norton E. Long, The Corporation, Its Satellites, and the Local Community, in THE CORPORATION IN MODERN SOCIETY 202 (E. Mason ed., 1960) (public interest directors form the communities in which the corporation operates), with Detlev Vagts, Reforming the "Modern" Corporation: Perspectives From the German, 80 HARV. L. REV. 23, 50-53 (1966) (examination of German two-tiered boards). In 1940, William O. Douglas advocated use of full time professionals as public interest directors. WILLIAM O. DOUGLAS, DEMOCRACY AND FINANCE 52-53 (1940).
27. Compare Norton E. Long, The Corporation, Its Satellites, and the Local Community, in THE CORPORATION IN MODERN SOCIETY 202 (E. Mason ed., 1960) (public interest directors form the communities in which the corporation operates), with Detlev Vagts, Reforming the "Modern" Corporation: Perspectives From the German, 80 HARV. L. REV. 23, 50-53 (1966) (examination of German two-tiered boards). In 1940, William O. Douglas advocated use of full time professionals as public interest directors. WILLIAM O. DOUGLAS, DEMOCRACY AND FINANCE 52-53 (1940).
28. See, e.g., Goldberg Resigns From TWA, NEWSWEEK, Oct. 30, 1972, at 88.
29. See generally Herman Schwartz, Governmentally Appointed Directors in a Private Corporation-The Communications Satellite Act of 1962, 79 HARV. L. REV. 350 (1965).
30. See generally Douglas M. Branson, Progress in the Art of Social Accounting and Other Arguments for Disclosure on Corporate Social Responsibility, 29 VAND. L. REV. 539 (1976).
31. See generally Donald Schwartz, The Public Interest Proxy Contest: Reflections on Campaign GM, 69 MICH. L. RE V. 419 (1971); Donald Schwartz, Proxy Power and Social Goals: How Campaign GM Succeeded, 45 ST. JOHN'S L. REV. 764 (1971).
32. See generally Donald Schwartz, The Public Interest Proxy Contest: Reflections on Campaign GM, 69 MICH. L. RE V. 419 (1971); Donald Schwartz, Proxy Power and Social Goals: How Campaign GM Succeeded, 45 ST. JOHN'S L. REV. 764 (1971).
33. See GENERAL MOTORS CORP., PROGRESS IN AREAS OF PUBLIC CONCERN (1971); GENERAL MOTORS CORP., RECORD OF PROGRESS (1970).
34. See GENERAL MOTORS CORP., PROGRESS IN AREAS OF PUBLIC CONCERN (1971); GENERAL MOTORS CORP., RECORD OF PROGRESS (1970).
35. Ralph Nader, Mark Green & Joel Seligman, Constitutionalizing the Corporation: The Case for the Federal Chartering of Giant Corporations (The Corporate Accountability Research Group 1976).
36. RALPH NADER, MARK GREEN & JOEL SELIGMAN, TAMING THE GIANT CORPORATION (1976).
37. See, e.g., REVISED MODEL BUS. CORP. ACT § 2.02(a) (1983) (no requirement that articles of incorporation set forth duration).
38. See, e.g., Joel F. Henning, Federal Corporate Chartering for Big Business: An Idea Whose Time Has Come, 21 DEPAUL L. REV. 915 (1972); Donald E. Schwartz, The Federal Chartering of Corporations: An Introduction, 61 GEO. L.J. 71 (1972); Note, Federal Chartering of Corporations: A Proposal, 61 GEO. L.J. 89 (1972).
39. See, e.g., Joel F. Henning, Federal Corporate Chartering for Big Business: An Idea Whose Time Has Come, 21 DEPAUL L. REV. 915 (1972); Donald E. Schwartz, The Federal Chartering of Corporations: An Introduction, 61 GEO. L.J. 71 (1972); Note, Federal Chartering of Corporations: A Proposal, 61 GEO. L.J. 89 (1972).
40. See, e.g., Joel F. Henning, Federal Corporate Chartering for Big Business: An Idea Whose Time Has Come, 21 DEPAUL L. REV. 915 (1972); Donald E. Schwartz, The Federal Chartering of Corporations: An Introduction, 61 GEO. L.J. 71 (1972); Note, Federal Chartering of Corporations: A Proposal, 61 GEO. L.J. 89 (1972).
41. Liggett v. Lee, 288 U.S. 517, 559 (1933) (Brandeis, J., dissenting).
42. But see DOUGLAS M. BRANSON, CORPORATE GOVERNANCE § 1. 12, at 34-37 (1993) (discussion of California statute which attempted to mandate cumulative voting for directors and other features of California law on California corporations which had "run away" to another incorporating jurisdiction such as Delaware or Nevada).
43. William L. Cary, Federalism and Corporate Law: Reflections Upon Delaware, 83 YALE L.J. 663, 665-66 (1974).
44. See, e.g., Daniel R. Fischel, The "Race to the Bottom" Revisited: Reflections on Recent Developments in Delaware's Corporation Law, 76 NW. U. L. REV. 913, 944 (1982) ("Apart from minimizing transaction costs and possibly facilitating the operation of market forces that discipline management, corporation law has little role to play.").
45. Henry G. Manne, Mergers and the Market for Corporate Control, 73 J. POL. ECON. 110, 113 (1965).
46. One of the more extreme pieces was Henry N. Butler & Larry E. Ribstein, Opting Out of Fiduciary Duties: A Response to the Anti-Contractarians, 65 WASH. L. REV. 1 (1990). See also Henry N. Butler, The Contractual Theory of the Corporation, 11 GEO. MASON L. REV. 99 (1989); Jonathan R. Macey, Corporate Law and Corporate Governance: A Contractual Perspective, 18 J. CORP. L. 185 (1993). Cf. Douglas M. Branson, Assault On Another Citadel: Attempts To Curtail the Fiduciary Standard of Loyalty Applicable to Corporate Directors, 57 FORDHAM L. REV. 375 (1988).
47. One of the more extreme pieces was Henry N. Butler & Larry E. Ribstein, Opting Out of Fiduciary Duties: A Response to the Anti-Contractarians, 65 WASH. L. REV. 1 (1990). See also Henry N. Butler, The Contractual Theory of the Corporation, 11 GEO. MASON L. REV. 99 (1989); Jonathan R. Macey, Corporate Law and Corporate Governance: A Contractual Perspective, 18 J. CORP. L. 185 (1993). Cf. Douglas M. Branson, Assault On Another Citadel: Attempts To Curtail the Fiduciary Standard of Loyalty Applicable to Corporate Directors, 57 FORDHAM L. REV. 375 (1988).
48. One of the more extreme pieces was Henry N. Butler & Larry E. Ribstein, Opting Out of Fiduciary Duties: A Response to the Anti-Contractarians, 65 WASH. L. REV. 1 (1990). See also Henry N. Butler, The Contractual Theory of the Corporation, 11 GEO. MASON L. REV. 99 (1989); Jonathan R. Macey, Corporate Law and Corporate Governance: A Contractual Perspective, 18 J. CORP. L. 185 (1993). Cf. Douglas M. Branson, Assault On Another Citadel: Attempts To Curtail the Fiduciary Standard of Loyalty Applicable to Corporate Directors, 57 FORDHAM L. REV. 375 (1988).
49. One of the more extreme pieces was Henry N. Butler & Larry E. Ribstein, Opting Out of Fiduciary Duties: A Response to the Anti-Contractarians, 65 WASH. L. REV. 1 (1990). See also Henry N. Butler, The Contractual Theory of the Corporation, 11 GEO. MASON L. REV. 99 (1989); Jonathan R. Macey, Corporate Law and Corporate Governance: A Contractual Perspective, 18 J. CORP. L. 185 (1993). Cf. Douglas M. Branson, Assault On Another Citadel: Attempts To Curtail the Fiduciary Standard of Loyalty Applicable to Corporate Directors, 57 FORDHAM L. REV. 375 (1988).
50. See, e.g., Douglas M. Branson, The Death of Contractarianism and the Vindication of Structure and Authority in Corporate Governance and Corporate Law, in PROGRESSIVE CORPORATE LAW 93 (Lawrence E. Mitchell ed., 1995).
51. See, e.g., John C. Coffee, Jr., The Future As History: The Prospects for Global Convergence in Corporate Governance and Its Implications, 93 NW. U. L. REV. 641, 644 (1999).
52. See, e.g., Peter Dodd & Richard Leftwich, The Market for Corporate Charters: Unhealthy Competition versus Federal Regulation, 53 J. BUS. 259, 263-66 (1980) (over fifty year period no statistically significant abnormally negative returns for shareholders following reincorporation in Delaware).
53. Two leading constitutionalist works are Melvin A. Eisenberg, The Structure of Corporation Law, 89 COLUM. L. REV. 1461 (1989), and John C. Coffee, Jr., The Mandatory/Enabling Balance in Corporate Law: An Essay on the Judicial Role, 89 COLUM. L. REV. 1618 (1989).
54. Two leading constitutionalist works are Melvin A. Eisenberg, The Structure of Corporation Law, 89 COLUM. L. REV. 1461 (1989), and John C. Coffee, Jr., The Mandatory/Enabling Balance in Corporate Law: An Essay on the Judicial Role, 89 COLUM. L. REV. 1618 (1989).
55. Washington and Oregon rank fifth and seventh, respectively, in historical frequency of citation to the restatements, trailing only the much more populous states of Pennsylvania, New York, California, Massachusetts, and Texas. See, e.g., American Law Institute, 2000 Annual Reports, Annex, "Published Case Citations to Restatements of the Law as of March 15, 2000," at http://www.ali.org/annualreport.
56. I was elected to the American Law Institute in 1979. I attended every minute of the corporate governance debate except for the debate at the 1991 meeting held in San Francisco, when I was a visiting professor in New Zealand. I recount many of these events based upon personal experience.
57. See, e.g., BRANSON, supra note 31, § 5.03, at 233 (Delaware business judgment rule and takeover decisions always sort independent directors from others and constitute a de facto requirement that a majority or super majority be independent).
58. MELVIN Á. EISENBERG, THE STRUCTURE OF THE CORPORATION: A LEGAL ANALYSIS (1976).
59. AMERICAN LAW INSTITUTE, PRINCIPLES OF CORPORATE GOVERNANCE: ANALYSIS AND RECOMMENDATIONS § 3.01 (1994) ("The management of the business of a publicly held corporation should be conducted by or under the supervision of such principal senior executives as are designated by the board of directors ...") (citations omitted) [hereinafter ALI CORP. GOV. PROJ.].
60. ALI CORP. GOG. PROJ. § 3.02(a)(1) ("The board of directors of a publicly held corporation should ... [s]elect, regularly evaluate, fix the compensation of, and, where appropriate, replace the principal senior executives.") (citations omitted).
61. See id. at § 3A.01.
62. See, e.g., id. at § 3A.02.
63. See id. at § 3A.05.
64. See id. at § 3A.04.
65. See, e.g., Douglas M. Branson, The Very Uncertain Prospect of "Global" Convergence in Corporate Governance, 34 CORNELL INT'L L.J. _, _ (forthcoming 2001) (manuscript on file with the editors of University of Pittsburgh Law Review).
66. Australian Institute of Company Directors, Corporate Practices and Conduct (2d ed. 1993) (Henry Bosch, AO, Committee Chair).
67. TREVOR SYKES, THE BOLD RIDERS (1994).
68. Committee on the Financial Aspects of Corporate Governance, The Code of Best Practice (London 1992) (Sir Adrian Cadbury, Committee Chair).
69. Committee on the Financial Aspects of Corporate Governance, Study Group on Directors Remuneration (London 1995) (Sir Richard Greenbury, Chair).
70. Committee on the Financial Aspects of Corporate Governance, Committee on Corporate Governance: Final Report (London 1998) (Sir Ronald Hampel, Chair).
71. The "Yellow Book" and compliance with its requirements are described in Brian R. Cheffins, Current Trends in Corporate Governance: Going From London to Milan via Toronto, 10 DUKE J. COMP. & INT'L L. 5 (1999).
72. See, e.g., James A. Fanto, The Role of Corporate Law in French Corporate Governance, 31 CORNELL INT'L L.J. 31, 31-32 & n.2 (1998) (citing Vienot Report).
73. See, e.g., Bernard Black, Agents Watching Agents: The Promise of Institutional Investor Voice, 39 UCLA L. REV. 811 (1992) and John C. Coffee, Jr., Liquidity Versus Control: The Institutional Investor As Corporate Monitor, 91 COLUM. L. REV. 1277 (1991). Cf. Edward B. Rock, The Logic and (Uncertain) Significance of Institutional Investor Activism, 79 GEO. L.J. 445 (1991); Roberta Romano, Public Pension Fund Activism in Corporate Governance Reconsidered, 93 COLUM. L. REV. 795 (1993).
74. See, e.g., Bernard Black, Agents Watching Agents: The Promise of Institutional Investor Voice, 39 UCLA L. REV. 811 (1992) and John C. Coffee, Jr., Liquidity Versus Control: The Institutional Investor As Corporate Monitor, 91 COLUM. L. REV. 1277 (1991). Cf. Edward B. Rock, The Logic and (Uncertain) Significance of Institutional Investor Activism, 79 GEO. L.J. 445 (1991); Roberta Romano, Public Pension Fund Activism in Corporate Governance Reconsidered, 93 COLUM. L. REV. 795 (1993).
75. See, e.g., Bernard Black, Agents Watching Agents: The Promise of Institutional Investor Voice, 39 UCLA L. REV. 811 (1992) and John C. Coffee, Jr., Liquidity Versus Control: The Institutional Investor As Corporate Monitor, 91 COLUM. L. REV. 1277 (1991). Cf. Edward B. Rock, The Logic and (Uncertain) Significance of Institutional Investor Activism, 79 GEO. L.J. 445 (1991); Roberta Romano, Public Pension Fund Activism in Corporate Governance Reconsidered, 93 COLUM. L. REV. 795 (1993).
76. See, e.g., Bernard Black, Agents Watching Agents: The Promise of Institutional Investor Voice, 39 UCLA L. REV. 811 (1992) and John C. Coffee, Jr., Liquidity Versus Control: The Institutional Investor As Corporate Monitor, 91 COLUM. L. REV. 1277 (1991). Cf. Edward B. Rock, The Logic and (Uncertain) Significance of Institutional Investor Activism, 79 GEO. L.J. 445 (1991); Roberta Romano, Public Pension Fund Activism in Corporate Governance Reconsidered, 93 COLUM. L. REV. 795 (1993).
77. Edward B. Rock, The Logic and (Uncertain) Significance of Institutional Shareholder Activism, 79 GEO. L.J. 445 (1991).
78. GEOFFREY P. STAPLEDON, INSTITUTIONAL SHAREHOLDERS AND CORPORATE GOVERNANCE (1996) (analysis of institutional investor activity in Australia and the United Kingdom).
79. Executive Compensation Disclosure, Exchange Act Release Nos. 33-6962 & 31-326 (Oct. 21, 1992), amending, inter alia, SEC Rule 14a-2(b) (exempting from filing and other requirements communications from persons not seeking proxy authority and having no substantial interest in the matter being voted upon, and Rule 14a-1, exempting communications which state merely how a shareholder intends to vote on a matter). See 17 C.F.R. §§ 240.14a-2(b) & 14a-1 (2001). See generally Robert S. Frenchman, The Recent Revisions to Federal Proxy Regulations: Lifting the Ban on Shareholder Communications, 68 TUL. L. REV. 161 (1993); Carol Goforth, Proxy Reform as a Means of Increasing Shareholder Participation in Corporate Governance: Too Little, But Not Too Late, 43 AM. U. L. REV. 379 (1994).
80. Executive Compensation Disclosure, Exchange Act Release Nos. 33-6962 & 31-326 (Oct. 21, 1992), amending, inter alia, SEC Rule 14a-2(b) (exempting from filing and other requirements communications from persons not seeking proxy authority and having no substantial interest in the matter being voted upon, and Rule 14a-1, exempting communications which state merely how a shareholder intends to vote on a matter). See 17 C.F.R. §§ 240.14a-2(b) & 14a-1 (2001). See generally Robert S. Frenchman, The Recent Revisions to Federal Proxy Regulations: Lifting the Ban on Shareholder Communications, 68 TUL. L. REV. 161 (1993); Carol Goforth, Proxy Reform as a Means of Increasing Shareholder Participation in Corporate Governance: Too Little, But Not Too Late, 43 AM. U. L. REV. 379 (1994).
81. The subject of to whom corporations should be responsible - to shareholders alone or to other constituencies such as labor, consumers and society - was the subject of the Berle-Dodd debates in the 1930s. See, e.g., Adolf A. Berle, Jr., Corporate Powers As Powers in Trust, 44 HARV. L. REV. 1049 (1931); Adolf A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365 (1932); E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 HARV. L. REV. 1145 (1932); E. Merrick Dodd, Jr., Is Effective Enforcement of the Fiduciary Duties of Corporate Managers Practicable?, 2 U. CHI. L. REV. 194 (1935).
82. The subject of to whom corporations should be responsible - to shareholders alone or to other constituencies such as labor, consumers and society - was the subject of the Berle-Dodd debates in the 1930s. See, e.g., Adolf A. Berle, Jr., Corporate Powers As Powers in Trust, 44 HARV. L. REV. 1049 (1931); Adolf A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365 (1932); E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 HARV. L. REV. 1145 (1932); E. Merrick Dodd, Jr., Is Effective Enforcement of the Fiduciary Duties of Corporate Managers Practicable?, 2 U. CHI. L. REV. 194 (1935).
83. The subject of to whom corporations should be responsible - to shareholders alone or to other constituencies such as labor, consumers and society - was the subject of the Berle-Dodd debates in the 1930s. See, e.g., Adolf A. Berle, Jr., Corporate Powers As Powers in Trust, 44 HARV. L. REV. 1049 (1931); Adolf A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365 (1932); E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 HARV. L. REV. 1145 (1932); E. Merrick Dodd, Jr., Is Effective Enforcement of the Fiduciary Duties of Corporate Managers Practicable?, 2 U. CHI. L. REV. 194 (1935).
84. The subject of to whom corporations should be responsible - to shareholders alone or to other constituencies such as labor, consumers and society - was the subject of the Berle-Dodd debates in the 1930s. See, e.g., Adolf A. Berle, Jr., Corporate Powers As Powers in Trust, 44 HARV. L. REV. 1049 (1931); Adolf A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365 (1932); E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 HARV. L. REV. 1145 (1932); E. Merrick Dodd, Jr., Is Effective Enforcement of the Fiduciary Duties of Corporate Managers Practicable?, 2 U. CHI. L. REV. 194 (1935).
85. See, e.g., BRANSON, supra note 31, § 8.03 ("Non-Shareholder Constituency Statutes").
86. See CONN. GEN. STAT. § 33-313(e) (1994). Corporations' lawyers and lobbyists had to be careful in drafting such statutes lest they become a sword rather than a shield. Directors of a Connecticut corporation must consider the interests of employees, customers, creditors, suppliers, "community and societal considerations," as well as long term and short term interests of the corporation and its stakeholders, "including the possibility that those interests may be best served by the continued independence of the corporation." A mandatory corporate constituency statue such as Connecticut's could well backfire. Labor interests and a local community could, for example, invoke the statute and directors' alleged failure to comply with it in litigation to stop a plant closing or relocation.
87. See IND. CODE ANN. § 23-1-35-1(f) (2000) ("Certain judicial decisions in Delaware ... are inconsistent with the proper application of the business judgment rule under this article.").
88. Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946, 955 (Del. 1985); see also BRANSON, supra note 31, § 7.19 (discussing Unocal Corp. v. Mega Petroleum Co.).
89. Revlon, Inc. v. MacAndrews & Forbes Holdings, 506 A.2d 173, 182 (Del. 1986).
90. See id.; see also BRANSON, supra note 31, § 7.20 (discussing Unocal Corp. v. Mega Petroleum Co.).
91. 15 PA. CONS. STAT. § 1715(b) (2000).
92. See, e.g., John McClaughry, Milton Friedman Responds: A Business and Society Interview, 1 BUS. & SOC'Y REV. 5 (1972) (discussion of corporate social responsibility is "utter hogwash");
93. Milton Friedman, The Social Responsibility of Business Is To Increase Its Profits, N.Y. TIMES, Sept. 13, 1970, § 6, at 32 (corporate social responsibility "could thoroughly undermine the very foundations of our free society" and "is a fundamentally subversive doctrine").
94. PROGRESSIVE CORPORATE LAW (Lawrence E. Mitchell ed., 1995).
95. See, e.g., David Millon, Communitarianism in Corporate Law: Foundations and Law Reform Strategies, in PROGRESSIVE CORPORATE LAW 1 (Lawrence E. Mitchell ed., 1995).
96. See, e.g., Marleen A. O'Connor, Promoting Economic Justice in Plant Closings: Exploring the Fiduciary/Contract Law Distinction to Enforce Implicit Employment Agreements, in PROGRESSIVE CORPORATE LAW, supra note 71, at 219 (Lawrence E. Mitchell ed., 1995).
97. See, e.g., National Committee on Corporate Governance, Framework - Code of Good Corporate Governance, Chapter 6 ("Stakeholders") (Republic of Indonesia) (1999).
98. See, e.g., Rado Bohinc & Stephen M. Bainbridge, Corporate Governance in Post-Privatized Slovenia, SOCIAL SCIENCE RESEARCH NETWORK ELECTRONIC PAPER COLLECTION (1999), available at Abstract-id-199548.
99. Lawrence E. Mitchell, Preface, in PROGRESSIVE CORPORATE LAW, supra note 71, at xiii (Lawrence E. Mitchell ed., 1995).
100. See generally BRANSON, supra note 31.
101. Exchange Act Release No. 33-5627 [1974-75 Transfer Binder]; Fed. Sec, L. Rep. (CCH) ¶ 85,720 (Oct. 14, 1975).
102. Cynthia A. Williams, The Securities and Exchange Commission and Corporate Social Transparency, 112 HARV. L. REV. 1197, 1267-68 (1999).
103. Id. at 1268.
104. See generally Jim Carlton, Against the Grain: How Home Depot and Activists Joined to Cut Logging Abuse, WALL ST. J., Sept. 26, 2000, at A1.
105. One is the Workers' Rights Consortium (WRC) which includes in its membership forty-six universities who sell logo merchandise as an adjunct to intercollegiate athletic programs. See The Wall Street Journal Taste-Review & Outlook: Labor 101, WALL ST. J., May 12, 2000, at W17 (Nike and its founder withdraw support from University of Oregon because Oregon joined WRC). The other is the Fair Labor Association, favored by producers such as Nike and GAP. See, e.g., Nike, Inc.: Second University to Lose License, Funding Contract, WALL ST. J., Apr. 28, 2000, at B6 (Nike withdraws funding from University of Michigan for joining WSC).
106. One is the Workers' Rights Consortium (WRC) which includes in its membership forty-six universities who sell logo merchandise as an adjunct to intercollegiate athletic programs. See The Wall Street Journal Taste-Review & Outlook: Labor 101, WALL ST. J., May 12, 2000, at W17 (Nike and its founder withdraw support from University of Oregon because Oregon joined WRC). The other is the Fair Labor Association, favored by producers such as Nike and GAP. See, e.g., Nike, Inc.: Second University to Lose License, Funding Contract, WALL ST. J., Apr. 28, 2000, at B6 (Nike withdraws funding from University of Michigan for joining WSC).
107. See, e.g., Mattel Creates System to Monitor Conditions in Overseas Factories, WALL ST. J., Nov. 21, 1997, at B9A (Mattel joins Nike, Levi Strauss, Reebok, Walt Disney and Gap to enact ¶a code of conduct for its overseas factories and independent audit and monitoring system to ensure compliance with its work standards worldwide¶).
108. See CERES World Wide Web Homepage, available at http://www.ceres.org/. Members of the coalition include the AFL-CIO, the Natural Resources Defense Council, the Sierra Club, and the Union of Concerned Scientists.
109. CERES Directory of Coalition Members, available at http://www.ceres.org/organizations/ companies/index.html.
110. SA 800 - The New Universal Solution For Demonstrating Workplace Values, available at http:// www.sgsicsus.com/sa8000#What.
111. On the subject of the ILO and SA 8000, see Williams, supra note 79, at 1202-03 & n.11.
112. See Williams, supra note 79, at 1290.
113. See CRA and Fair Lending News Service, http://www.cramarketplace.com.
114. See Williams, supra note 79, at 1290 (reviewing Internet sources of social responsibility information).
115. See, e.g., Branson, supra note 23, at 617 (¶Another Parity As a Goal of Disclosure - Equality of Access To Information for Investors or Categories of Investors¶).
116. See Natural Res. Def. Council, Inc. v. SEC (NRDC I), 389 F. Supp. 689 (D.D.C. 1974) (remanding to SEC to reconsider expanded disclosure requirements on environmental and civil rights matters); Natural Res. Def. Council, Inc. v. SEC (NRDC II), 432 F. Supp. 1190 (D.D.C. 1977) (holding SEC decision to require only limited disclosure to be "arbitrary and capricious"), rev'd, 606 F.2d 1031 (D.C. Cir. 1979) (upholding SEC decision as in compliance with the Administrative Procedure Act).
117. Cynthia A. Williams, The Securities and Exchange Commission and Corporate Social Transparency, 112 HARV. L. REV. 1197 (1999).
118. See, e.g., David Hess, Social Reporting: A Reflexive Law Approach to Corporate Social Responsiveness, 25 J. CORP. L. 41 (1999); Terry O'Neill, Listening to Stakeholders (1998) (unpublished manuscript, on file with the University of Pittsburgh Law Review).
119. See, e.g., David Hess, Social Reporting: A Reflexive Law Approach to Corporate Social Responsiveness, 25 J. CORP. L. 41 (1999); Terry O'Neill, Listening to Stakeholders (1998) (unpublished manuscript, on file with the University of Pittsburgh Law Review).
120. John M. Church, A Market Solution to Green Marketing: Some Lessons From the Economics of Information, 79 MINN. L. REV. 245, 251-52 (1994).
121. Id. at 253.
122. "[T]he lemming-like movement from cars to SUVs has resulted in some 200 million more tons of carbon-dioxide emissions every year than if everyone had stayed with his nice little Taurus. But individuals can exert a greater force for environmental good by pressuring corporations and governments than by lecturing their Navigator-driving friends. Or by spending two years in a tree [sic]." Sharon Begley, The Battle for Planet Earth, NEWSWEEK, Apr. 24, 2000, at 50.
123. See Mark McCown, Eco-labeling in the European Union, 8 GEO. INT'L ENVIR. L. REV. 492, 493 (1996).
124. Joseph DiMento & Francesco Bertolini, Green Management and the Regulatory Process: For Mother Earth, Market Share, and Modern Rule, 9 TRANSNAT'L LAW. 121, 156 (1996) (table comparing Canada, Australia, EU countries, Japan, South Africa and the U.S.). Japan has the lowest rate of introduction of products making green claims, ranging from .7 to 1.8 percent of new product introductions. Id.
125. See generally Church, supra note 95, at 305-06.
126. Id.
127. See generally Church, supra note 95, at 305-06.
128. Id. at 298-303. See generally Stephen Gardner, How Green Were My Values: Regulation of Environmental Marketing Claims, 23 U. TOL. L. REV. 31 (1991).
129. See Valerie Ann Zondorak, A New Face in Corporate Environmental Responsibility: The Valdez Principles, 18 B.C. ENVTL. AFF. L. REV. 457, 481-82 (1991) (in their earlier incarnation the CERS Principles were known as the "Valdez Principles").
130. See, e.g., Elizabeth Glass Geltman & Andrew E. Skroback, Environmental Activism and the Ethical Investor, 22 J. CORP. LAW. 465 (1997).
131. I recently wrote that, in attempting to regulate far flung multinationals, nation states face some of the same collective action problems, such as the free rider problem, that dispersed shareholders face in public corporations. Whatever their shortcomings, international organizations such as the WTO are the best hope for solving these collective action problems. See Douglas M. Branson, Teaching Comparative Corporate Governance: The Significance of "Soft Law" and International Institutions, 34 GA. L. REV. 669, 680-81, 693-95 (2000).