{"id":3261,"date":"2022-02-08T00:21:20","date_gmt":"2022-02-08T00:21:20","guid":{"rendered":"https:\/\/live-cornell-law-review.pantheonsite.io\/?p=3261"},"modified":"2022-02-08T00:21:20","modified_gmt":"2022-02-08T00:21:20","slug":"on-the-promise-of-stakeholder-governance-a-response-to-bebchuk-and-tallarita","status":"publish","type":"post","link":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/2022\/02\/08\/on-the-promise-of-stakeholder-governance-a-response-to-bebchuk-and-tallarita\/","title":{"rendered":"On the Promise of Stakeholder Governance: A Response to Bebchuk and Tallarita"},"content":{"rendered":"\n<p>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\u2014a governance regime that authorizes directors to manage their corporations having in mind the interests not of stockholders alone, but also of employees and customers and society at large.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_3261_1('footnote_plugin_reference_3261_1_1');\" onkeypress=\"footnote_moveToReference_3261_1('footnote_plugin_reference_3261_1_1');\" ><sup id=\"footnote_plugin_tooltip_3261_1_1\" class=\"footnote_plugin_tooltip_text\">1<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">1. See, e.g., RICHARD A. POSNER, A FAILURE OF CAPITALISM: THE CRISIS OF \u201808 AND THE DESCENT INTO DEPRESSION xii, 260 (2009) (revisiting position on deregulation in the wake of the financial crisis).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_3261_1_1').tooltip({ tip: '#footnote_plugin_tooltip_text_3261_1_1', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script> Calling the prospect of stakeholder governance an \u201cillusory promise,\u201d Bebchuk and Tallarita trundle out a familiar litany of reasons why change won\u2019t work and that the only productive path forward is the same path that has guided corporate governance over the past decades.<sup class=\"footnote_referrer\"><a role=\"button\" tabindex=\"0\" onclick=\"footnote_moveToReference_3261_1('footnote_plugin_reference_3261_1_2');\" onkeypress=\"footnote_moveToReference_3261_1('footnote_plugin_reference_3261_1_2');\" ><sup id=\"footnote_plugin_tooltip_3261_1_2\" class=\"footnote_plugin_tooltip_text\">2<\/sup><\/a><cite class=\"footnote_tooltip\"><span class=\"footnote-inner\">2. See Lucian A. Bebchuk &amp; Roberto Tallarita, The Illusory Promise of Stakeholder Governance, 106 CORNELL L. REV. 91, 176\u201377 (2020).<\/span><\/cite><\/sup><script type=\"text\/javascript\"> jQuery('#footnote_plugin_tooltip_3261_1_2').tooltip({ tip: '#footnote_plugin_tooltip_text_3261_1_2', tipClass: 'footnote_tooltip', effect: 'fade', predelay: 0, fadeInSpeed: 200, delay: 400, fadeOutSpeed: 200, position: 'top center', relative: true, offset: [-7, 0], });<\/script><\/p>\n\n\n\n<p>We suggest that Professors Bebchuk and Tallarita should reconsider their all-chips-in approach to the share price maximization model. We see in our daily work that business leaders have been forced to focus too heavily on share prices and quarterly earnings to the exclusion of the health of their businesses and of the broader society. We see a system that no one thinks is functioning as it should. We recognize that a more inclusive corporate governance model will not solve all these problems. But stakeholder- and society-facing corporate governance remains an urgent imperative nonetheless\u2014if for no other reason than to reinforce the institutional legitimacy of the form of business organization that has been an engine of growth for generations and whose contribution is needed now more than ever. At all events, doing nothing, staying the familiar course\u2014which is the Bebchuk prescription\u2014should not be an option.<\/p>\n\n\n\n<p>To read this Essay, please click here: <em><a href=\"https:\/\/live-cornell-law-review.pantheonsite.io\/wp-content\/uploads\/2022\/02\/Savitt-Kovvali-essay-final.pdf\">On the Promise of Stakeholder Governance: A Response to Bebchuk and Tallarita.<\/a><\/em><\/p>\n<div class=\"speaker-mute footnotes_reference_container\"> <div class=\"footnote_container_prepare\"><p><span role=\"button\" tabindex=\"0\" class=\"footnote_reference_container_label pointer\" onclick=\"footnote_expand_collapse_reference_container_3261_1();\">References<\/span><span role=\"button\" tabindex=\"0\" class=\"footnote_reference_container_collapse_button\" style=\"display: none;\" onclick=\"footnote_expand_collapse_reference_container_3261_1();\">[<a id=\"footnote_reference_container_collapse_button_3261_1\">+<\/a>]<\/span><\/p><\/div> <div id=\"footnote_references_container_3261_1\" style=\"\"><table class=\"footnotes_table footnote-reference-container\"><caption class=\"accessibility\">References<\/caption> <tbody> \r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_3261_1('footnote_plugin_tooltip_3261_1_1');\"><a id=\"footnote_plugin_reference_3261_1_1\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>1<\/a><\/th> <td class=\"footnote_plugin_text\">See, e.g., RICHARD A. POSNER, A FAILURE OF CAPITALISM: THE CRISIS OF \u201808 AND THE DESCENT INTO DEPRESSION xii, 260 (2009) (revisiting position on deregulation in the wake of the financial crisis).<\/td><\/tr>\r\n\r\n<tr class=\"footnotes_plugin_reference_row\"> <th scope=\"row\" class=\"footnote_plugin_index_combi pointer\"  onclick=\"footnote_moveToAnchor_3261_1('footnote_plugin_tooltip_3261_1_2');\"><a id=\"footnote_plugin_reference_3261_1_2\" class=\"footnote_backlink\"><span class=\"footnote_index_arrow\">&#8593;<\/span>2<\/a><\/th> <td class=\"footnote_plugin_text\">See Lucian A. Bebchuk &amp; Roberto Tallarita, The Illusory Promise of Stakeholder Governance, 106 CORNELL L. REV. 91, 176\u201377 (2020).<\/td><\/tr>\r\n\r\n <\/tbody> <\/table> <\/div><\/div><script type=\"text\/javascript\"> function footnote_expand_reference_container_3261_1() { jQuery('#footnote_references_container_3261_1').show(); jQuery('#footnote_reference_container_collapse_button_3261_1').text('\u2212'); } function footnote_collapse_reference_container_3261_1() { jQuery('#footnote_references_container_3261_1').hide(); jQuery('#footnote_reference_container_collapse_button_3261_1').text('+'); } function footnote_expand_collapse_reference_container_3261_1() { if (jQuery('#footnote_references_container_3261_1').is(':hidden')) { footnote_expand_reference_container_3261_1(); } else { footnote_collapse_reference_container_3261_1(); } } function footnote_moveToReference_3261_1(p_str_TargetID) { footnote_expand_reference_container_3261_1(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } } function footnote_moveToAnchor_3261_1(p_str_TargetID) { footnote_expand_reference_container_3261_1(); var l_obj_Target = jQuery('#' + p_str_TargetID); if (l_obj_Target.length) { jQuery( 'html, body' ).delay( 0 ); jQuery('html, body').animate({ scrollTop: l_obj_Target.offset().top - window.innerHeight * 0.2 }, 380); } }<\/script>","protected":false},"excerpt":{"rendered":"<p>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\u2014a governance regime that authorizes directors to manage their corporations having in mind the interests not of stockholders alone,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[26,101,52],"tags":[122,221,614,616],"class_list":["post-3261","post","type-post","status-publish","format-standard","hentry","category-essay","category-issue-7-print-volume-106","category-print-volume-106","tag-all-chips-in","tag-corporate-governance","tag-stakeholder","tag-stakeholder-governance"],"acf":[],"_links":{"self":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts\/3261","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/comments?post=3261"}],"version-history":[{"count":0,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/posts\/3261\/revisions"}],"wp:attachment":[{"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/media?parent=3261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/categories?post=3261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/publications.lawschool.cornell.edu\/lawreview\/wp-json\/wp\/v2\/tags?post=3261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}