Cornell Law Review

On the Promise of Stakeholder Governance: A Response to Bebchuk and Tallarita

William Savitt, Partner, Wachtell, Lipton, Rosen & Katz

Aneil Kovvali, Harry A. Bigelow Teaching Fellow & Lecturer in Law, University of Chicago Law School

Professor Bebchuk and his coauthor Roberto Tallarita have launched a broadside against recent efforts of business leaders, scholars, and lawyers to promote a corporate governance model that permits directors to take into account interests other than stockholders—a governance regime that authorizes directors to manage their corporations having in mind the interests not of stockholders alone,…

Feb 2022

Article

The Illusory Promise of Stakeholder Governance

Lucian A. Bebchuk, James Barr Ames Professor of Law, Economics, and Finance, and Director of the Program on Corporate Governance, Harvard Law School

Roberto Tallarita, Terence M. Considine Senior Fellow in Law and Economics, and Associate Director of the Program on Corporate Governance, Harvard Law School

To address growing concerns about the negative effects of corporations on their stakeholders, supporters of stakeholder governance (“stakeholderism”) advocate a governance model that encourages and relies on corporate leaders to serve the interests of stakeholders and not only those of shareholders. We conduct a conceptual, economic, and empirical analysis of stakeholderism and its expected consequences. Stakeholderism, we conclude, is an inadequate and substantially counterproductive approach to addressing stakeholder concerns.

Dec 2020

Recent News & Events

Cornell Law Review, Issue 4

Cornell Law Review is proud to announce Vol. 105, Issue 4, with Articles and Essays exploring Tort as Private Administration; Justice Scalia’s Campaign Against Legislative History; Corporate Privacy; Product Liability Law; and Student Notes that explore the Racial Gap in Financial Services and a Crime-Fraud Exception to Executive Privilege. Thank you to our amazing authors for their outstanding collaboration and patience with us during the COVID-19 pandemic.

Aug 2020

Article

Corporate Law and the Myth of Efficient Market Control

 William W. Bratton, Nicholas F. Gallicchio Professor of Law, University of Pennsylvania Law School

Simone M. Sepe, Professor of Law and Finance, James E. Rogers College of Law, University of Arizona; Université Toulouse 1 Capitole; and Toulouse School of Economics

In recent times, there has been an unprecedented shift in power from managers to shareholders, a shift that realizes the long-held theoretical aspiration of market control of the corporation. This Article subjects the market control paradigm to comprehensive economic examination and finds it wanting.  The market control paradigm relies on a narrow economic model that…

Mar 2020