In article <k1v05f$qjs$
1...@dont-email.me>,
Unless modified by statute, traditional fiduciary duties require
corporate officials to further the interests of shareholders, and thus
require them to maximize corporate profits subject to the obligation to
comply with independent legal constraints.1 Further, this is desirable
as a matter of both law and economics. If certain conduct imposes an
excessive externality on others, then an independent law should regulate
and impose liability whether or not the actor is a corporation, and
if the conduct does not impose such an impermissible externality, then
the most socially desirable thing for corporations to do is maximize
profits.2 The canonical account adds that a single goal like
profit-maximization is easier to monitor,3 and that there is no reason
to impose a special �tax� on dissenting shareholders to further public
interest goals that is not imposed on others.4
The 1980s takeover wave led to a political backlash that caused 29
states to adopt corporate constituency statutes that allowed or required
managers to take the interests of other constituencies into account,
sometimes generally, sometimes just in corporate control transactions.5
But these statutes were not really designed to further the public
interest; rather they were just a subterfuge for allowing management to
block takeovers that were contrary to management interests.6 Thus, these
statutes should be narrowly interpreted. One way, proposed by the ABA
and others, is to interpret these statutes to mean that, while
management can consider the interests of other constituencies, they can
do so only to the extent that doing so advances corporate profits.7
Further, the canonical account stresses, the other 21 states remain
governed by the traditional rule. And since these 21 states
include Delaware, the 800 pound gorilla of corporate law where most of
the big corporations are incorporated, they are more important in
describing the current state of the law.
1 See, e.g., ROBERT CLARK , CORPORATE LAW 17-19, 688, 690 (1986);
Macey, An Economic Analysis of the Various
Rationales for Making Shareholders the Exclusive Beneficiaries of
Corporate Fiduciary Duties , 21 STETSON L. REV .
23, 23 (1991).
2 See CLARK , supra note , at 20-21, 30-32, 677-81, 692, 702; Macey,
supra note , at 40-43.
3 See CLARK , supra note , at 20, 679, 692, 702; American Bar
Association Committee on Corporate Laws, Other
Constituency Statutes: Potential for Confusion , 45 BUS . L. REV . 2253,
2269 (1990) [hereinafter �ABA�]
4 See, e.g., CLARK , supra note , at 603, 679; Milton Friedman, The
Social Responsibility of Business is to Increase
Its Profits , The New York Times, Sept. 13, 1970 (Magazine at 33).
5 See CHOPER , COFFEE & GILSON , CASES AND MATERIALS ON CORPORATIONS
42 (5th ed. 2000) [hereinafter � CHOPER ,
COFFEE & GILSON 5th Edition�].
6 See, e.g., Bainbridge, Interpreting Nonshareholder Constituency
Statutes, 19 PEPP . L. REV . 971, 1025 (1992);
Macey, supra note, at 26, 33, 44.
7 See ABA, supra note , at .