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Meeting ID: 935 8274 5956
Zoom URL: https://uni-frankfurt.zoom.us/j/93582745956?pwd=cGNpMU04SlNNaVQ3RnJmaVdGdjFZdz09
The debate on corporate purpose is thriving. Yet, even as new developments arise such as the growth of ESG investing and the Business Roundtable’s statement elevating stakeholder interests, the needle does not seem to move from the dominant shareholder primacy framework, in which the ultimate aim of the corporation is to maximize shareholder value.
This Article provides a systems-level explanation for this phenomenon that details how a vast array of institutional players orient corporations toward shareholder interests through law, culture, and markets. This “corporate governance machine” helped transform the corporate social responsibility movement into shareholder value-oriented ESG, pushed stakeholder capitalism to the new separate form of entity known as the benefit corporation, and homogenized public company boards of directors across industries. Our analysis suggests that, absent a major paradigm shift, advocacy pushing corporations to consider the interests of employees, communities, and the environment will fail if such effort is not framed as advancing shareholder interests. And beyond the debate over corporate purpose, we show that the corporate governance machine shapes the path of legal reform, encourages one-size-fits-all governance, and hampers innovation. It also affects the balance of companies that decide to go public and the activities of those that do.