Stakeholder Perspectives on Law and Finance: Can or Should Corporate Law and Securities Regulation Address Broader Social Challenges?

Dear Colleagues,

More than half a century ago, the Nobel Prize-winning economist Milton Friedman advanced the notion of shareholder primacy. According to Friedman, "corporations have no higher purpose than maximizing profits for their shareholders." Indeed, Friedman made the further claim that “[f]ew trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible”. Since the establishment of Friedman’s influential theory and the strong influence of the Chicago school of law and economics, mainstream law and finance scholars have predominantly assessed corporate law and governance from the lens of shareholder primacy. Until recently, academic orthodoxy generally overlooked broader societal concerns. However, the tide turned in 2019 when the Business Roundtable adopted a new Statement on the Purpose of a Corporation. This statement explicitly departs from shareholder primacy and endorses a stakeholder primacy perspective on corporate responsibility that is committed to all stakeholders, including employees, consumers, the environment, etc.

This special volume invites the submission of academic articles that address this recent pivot toward stakeholder primacy. Of particular interest are works that explore the ways in which corporate and securities laws can or cannot, and should or should not, address larger socioeconomic issues, such as the environment, wealth inequality, gender/racial inequality, etc. Sample questions might include the following or similar questions: Should all investors have access to hedge funds to reduce wealth inequality? Should stock buybacks be more heavily regulated to level the playing field between workers and shareholders? Can/should corporate and/or securities laws address harms inflicted by U.S. corporations and multinationals on poor communities domestically or abroad? Are corporate board quotas the proper way to address racial and/or gender inequality? Should employees be guaranteed board representation? These are just a few examples. However, the topic is general enough to accommodate several research questions that examine, on the one hand, the intersection of corporate and securities laws, and on the other hand, larger social questions.

Prof. Dr. Laura N. Beny
Guest Editor

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