Corporate Philanthropy Symposium
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28 |
Summer 1998
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NUMBER
1 |
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Corporate Conduct that Does Not Maximize Shareholder Gain: Legal Conduct, Ethical Conduct, the Penumbra Effect, Reciprocity, the Prisoner's Dilemma, Sheep's Clothing, Social Conduct, and Disclosure
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Melvin Aron Eisenberg |
| A long-standing issue in corporate law is the extent to which corporations can properly engage in nonmaximizing conduct. The analysis of this issue has often been obscured by a tendency to treat nonmaximizing conduct as a single category. In fact, however, such conduct falls into a number of different categories, many of which are consistent with maximization. For example, obedience to legal and ethical principles is consistent with maximization, even if greater gains could have been achieved by acting unlawfully or unethically, because law and ethics are channels through which maximization must flow. Certain other kinds of nonmaximizing conduct may be justified either because the conduct falls within the penumbra of legal or ethical principles, reciprocates for benefits that the corporation has received, or is equivalent to ordinary business activity; or because the conduct, if engaged in by a sufficient number of corporations, is value-maximizing. Nonmaximizing conduct that does not fall within these categories may still be justified if it is reasonable, in terms of the nexus between the conduct and the corporation's business and the amount involved in light of customary practices. However, such conduct should be subject to the check of disclosure, especially in the case of contributions to a nonprofit entity that involve conflicts of interest. |
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A Contractarian Defense of Corporate Philanthropy
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Margaret M. Blair |
| Statutory and case law make it clear that corporate officers and directors have very wide discretion to direct reasonable amounts of corporate resources toward artistic, educational, and humanitarian causes, even if those causes have only a remote connection (or no obvious connection at all) to the business goals and profitability of the firm. This stance of the law has been defended primarily by reference to an "entity" theory of the firm. By contrast, contractarian legal scholars, who view the corporation in terms of a principal-agent model, with shareholders as principals, and officers and directors as their agents, have argued that corporate giving, if it is permitted at all, should be strictly limited to those situations in which the benefit to the firm in the form of higher expected profits is clear and compelling. This paper provides an alternative defense of managerial discretion with respect to corporate philanthropy that embraces contractarian reasoning but follows that reasoning to a different conclusion. The argument uses a "team production" model to make the case that the mutual "contract" that corporate participants enter into requires granting directors very wide discretion in making decisions about the use of corporate assets, including discretion to use corporate assets for philanthropic causes or charitable causes. |
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Calabresi's Razor: A Short Cut to Responsibility
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Ellen Wertheimer |
| Modern products liability law has become riddled with exceptions which allow manufacturers of products to avoid responsibility for the injuries their products cause. The complicated rules applicable to HMOs has likewise allowed HMOs to avoid liability for their negligence. Calabresi's Razor argues that the increased complexity of the law applicable to products and HMOs is a mistake both procedurally and substantively. The rules should be simple: manufacturers should be liable for their defective products and HMOs should be liable for their negligent decisions |
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The Nuclear Weapons Opinions: Reflections on the Advisory Procedure of the National Court of Justice
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Liz Heffernan |
| The recent nuclear tests conducted by India and Pakistan have focused international attention on the controversial issue of nuclear proliferation. This Article, written in advance of those tests, recalls the advisory opinions of the International Court of Justice on the legality of nuclear weapons. The Author examines the propriety of the advisory procedure as a vehicle for the ICJ's examination of the nuclear issue and reflects on the wisdom of the ICJ's determinations regarding the scope and extent of its adjudication. |
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Betting on Brownfields - Does Florida's Brownfields Redevelopment Act Transform Liability into Opportunity?
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Tara Burns Koch |
| This Comment analyzes the Florida Brownfields Redevelopment Act and its likelihood for success. The Author provides a background on the "brownfield stigma" by discussing environmental laws and other sources that have inadvertently thwarted brownfield redevelopment. The Author also provides an overview of federal action initiated by the Clinton Administration before focusing on Florida's Brownfields Redevelopment Act. This Comment discusses potential trouble spots for Florida developers, regulator concerns that may be addressed in the upcoming 1998 Session of the Florida Legislature, other environmental, moral, and political concerns with Florida's initiative, and other state voluntary programs in general. The Comment also discussed the Act in light of its application in Clearwater, Florida. Finally, the Author closes with a discussion of the Florida Brownfields Redevelopment Act's likely success due not only to its prudent middle-road approach involving both state and local government and the private sector, but also to its unique unification of several interests into a common goal. |
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