From a practical standpoint, the most significant part of the 1970 Milton Friedman essay in the New York Times was the headline: “The Social Responsibility Of Business Is to Increase its Profits.” For a half-century, that phrase has been used to summarize the essay, and alongside Friedman’s similar views in a 1962 treatise, also used in support of “shareholder primacy” as the bedrock of American capitalism. “Shareholder primacy” and “Friedman doctrine” became interchangeable. The Friedman doctrine was a precursor to, and became a doctrinal foundation for an era of short-termism, hostile takeovers, extortion by corporate raiders, junk bond financing and the erosion of protections for employees, the environment and society generally, all in support of increasing corporate profits and maximizing value for shareholders. This concept of capitalism took hold in the business schools and the boardrooms, became ascendant in the eighties and continued as Wall Street gospel until 2008, when the perils of short-termism were vividly illuminated by the financial crisis, and the long-term economic and societal harms of shareholder primacy became increasingly urgent and impossible to ignore. Since then, acceptance of and reliance on the Friedman doctrine has been widely eroded, as a growing consensus of business leaders, economists, investors, lawyers, policymakers and important parts of the academic community have embraced stakeholder capitalism as the key to sustainable, broad-based, long-term American prosperity. This is illustrated by the World Economic Forum’s request that I prepare a new paradigm for corporate governance which it published in 2016 and its issuance of the 2020 Davos Manifesto embracing stakeholder and ESG (environment, social and governance) principles, as well as the 2019 abandonment of shareholder primacy and adoption of stakeholder governance by the Business Roundtable. So too, has corporate purpose and stakeholder and ESG governance been embraced by index fund managers BlackRock, State Street, Vanguard and other major investors.

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At the end of 2019 (which now seems so long ago), my book CEO Leadership: Navigating the New Era in Corporate Governance was published by The University of Chicago Press. My target audience is current and future CEOs and board members, those who advise them and those who teach law and business school students who aspire to those positions. My book is a combination of (i) a summary of the seminar on corporate governance that I teach at The University of Chicago Law School, (ii) a summary of a seminar on leadership that I taught to undergraduates at the University and (iii) what I have observed and learned in more than 40 years of advising the CEOs and boards of public companies.

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The gentlemen do protest too much, we think—with apologies to William Shakespeare for abusing his fine words in Hamlet, Prince of Denmark. Lucian Bebchuk and Roberto Tallarita, both at Harvard, have joined fellow princes in academia (not a princess in sight) and, it seems, the Financial Times in a veritable onslaught on stakeholder capitalism over the last 10 days. Amplifying a message by loud repetition is one way to promote the status quo in corporate governance and also, perhaps, to sell newspapers. But in a world of misinformation, we found our eyebrows rising.

The timing of this onslaught, just as the US presidential election starts to hurtle towards November 3, 2020, is interesting. It comes too in the middle of a pandemic that has seen a decoupling between the real economy and a stock market pushed ever higher by the monopoly power of technology companies. At issue is the historic statement of corporate purpose made by the Business Roundtable last year. The BRT is now composed of 200 CEOs, not the 180 still referred to by many in the media too bored by the concept of corporate purpose to keep track. Given that each of these CEOs on average employs 100,000 people or more, the addition of 20 more is a significant number.

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As companies prepare to report another quarter of doing business in a pandemic, they have the benefit of drawing on the experiences and lessons learned from the last two quarters. It is important that companies reflect on the lessons learned and foresee what financial reporting issues may lie ahead, the accounting topics that are going to be trending, the related challenges that will arise and ways to resolve them in order to avoid business disruption and continue creating value.

A recurring theme of the myriad of financial reporting issues associated with COVID-19 is the need for robust and transparent disclosure and communication. Given the continuous and rapidly evolving economic impact of the pandemic, management should consider how it can provide timely updates to stakeholders and investors regarding the pandemic’s current and future impact on the company, as well as share plans, to the best extent possible, to evolve and thrive regardless of industry.

There are three broad-based categories of communications that companies should focus on, especially as they are wrapping up Q2 and hurtling towards Q3: transparent disclosures regarding key assumptions and critical estimates, communications around non-GAAP measures, and effective COVID-19.

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The American Revolution started with a boycott of English tea, and the boycott of Montgomery buses was a key event in the civil rights movement. Not only are boycotts integral to American history, but they are also a very popular form of political engagement: 38% of Americans are currently boycotting at least one company.  Boycotts are becoming popular also in the investment world, in the form of divestment:  when Morningstar started ranking mutual funds based on their sustainable investing criteria, $24 billion flowed into “high sustainability” funds and $12 billion flowed out of “low sustainability” funds (Hartzmark and Sussman, 2019). What are the welfare consequences of these boycotts and divestments? How do they compare with other forms of political engagement at the corporate level?

In a recent paper we try to answer these questions.  For concreteness we focus on the case of an environmental externality, pollution. We assume that a fraction of the population is “socially responsible” in the sense that these individuals put a positive weight (the social responsibility parameter) on aggregate welfare when they make decisions. We study the welfare consequences if these socially responsible stakeholders exercise their exit option (divestment or boycott) or their voice one (engagement).

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Replacing poorly performing CEOs is one of the key tasks of corporate boards and a potentially important source of CEO incentives. However, prior literature finds that forced CEO departures are rare, and that many CEOs remain in office in spite of poor performance. Our paper revisits this evidence and finds that performance-related turnovers are much more common than previously thought. We diverge from prior studies that classify turnovers into forced and voluntary and instead introduce the concept of performance-induced turnover, which we define as turnover that would not have occurred had performance been “good”.

To operationalize this, we estimate the turnover probability at high levels of performance and assume that any turnovers in excess of this probability are caused by performance being worse. Using this approach, we estimate that close to half of all CEO turnovers are performance induced, many more than the 20% of turnovers the prior literature classifies as forced. The key reason for this discrepancy is simple: turnovers classified as “voluntary” by prior studies are substantially more likely after poor performance, suggesting that many are in fact performance induced. This is especially true for turnovers of CEOs aged 60 or older, which standard algorithms classify as automatically voluntary.

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A new WSJ op-ed: “‘Stakeholder’ Capitalism’ Seems Mostly for Show” (Lucian Bebchuk and Roberto Tallarita, Harvard Law School Program on Corporate Governance) posits that the corporate CEOs that signed onto the Business Roundtable’s (BRT) updated Statement of Purpose of a Corporation last year appear to have done so primarily to generate positive PR rather than to reflect real change in how their companies operate based on the fact that few signatory CEOs sought or obtained board approval or ratification. The conclusion rests on the theory that if CEOs believed that signing onto the updated statement was an “important corporate decision,” they would not have signed on without their board’s approval as a matter of good corporate governance. The assertion that few signatory CEOs sought or obtained board approval or ratification is based on responses to the authors’ inquiries from 48 companies, or approximately 27% of all CEO signatories, and the authors’ extrapolated expectation that the balance of companies that did not respond to their inquiry would have responded similarly.*

The op-ed theorizes: “The most plausible explanation for the lack of board approval is that CEOs didn’t regard the statement as a commitment to make a major change in how their companies treat stakeholders. That may be because they believe their companies are already meeting the standard for taking care of stakeholders. But it still implies that they believed signing the statement wasn’t a major step for their businesses.” The op-ed seeks to further support its view about signatory CEOs taking action merely for appearances based on the authors’ review of the companies’ corporate governance guidelines, which purportedly commonly reflect a “shareholder primacy” approach.

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At the center of a fundamental and heated debate about the purpose that corporations should serve, an increasingly influential “stakeholderism” view advocates giving corporate leaders the discretionary power to serve all stakeholders and not just shareholders. Supporters of stakeholderism argue that its application would address growing concerns about the impact of corporations on society and the environment. By contrast, critics of stakeholderism object that corporate leaders should not be expected to use expanded discretion to benefit stakeholders. In a new study we placed on SSRN, For Whom Corporate Leaders Bargain, we put forward novel empirical evidence that can contribute to resolving this key debate.

Although stakeholderism has enjoyed unprecedented levels of support in recent years, during the era of hostile takeovers many states already adopted “constituency statutes” that embraced an approach similar to that advocated by modern stakeholderists. Proposed as a remedy to eliminate or reduce the adverse effects of acquisitions on employees and other stakeholders, these statutes accorded corporate leaders the power to give weight to the interests of stakeholders when considering a sale of their companies. The current debate should be informed, we argue, by the lessons that can be learned from the results produced by this large-scale experiment in stakeholderism.

We therefore set out to investigate empirically whether constituency statutes actually delivered protections for stakeholders as was hoped for. Although constituency statutes have long been a common topic in corporate law textbooks, as well as the focus of many law review articles, thus far there has been no direct study of the terms of acquisition agreements negotiated in the shadow of such statutes. Using hand-collected data on a large sample of such agreements from the past two decades, we put forward novel empirical evidence on the subject.

We document that corporate leaders selling their companies to private equity buyers obtained substantial benefits for their shareholders as well as for themselves. By contrast, corporate leaders made little use of their power to give weight to the interests of stakeholders. Our review of the contractual terms of these deals finds very little protection provided to stakeholders from the risks posed by private equity control.

We conclude that constituency statutes have failed to deliver their promised benefits. These conclusions have implications not only for the long-standing debate on constituency statutes but also for the general debate on stakeholder capitalism. Our findings cast substantial doubt on the wisdom of relying on the discretion of corporate leaders, as stakeholderism advocates, to address concerns about the adverse effects of corporations on their stakeholders.

Below is a more detailed account of our analysis:

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Directors of most for-profit U.S. corporations have long considered the corporation’s relationships with customers, employees, suppliers and the communities in which they operate—sometimes referred to as “stakeholders” [1]—in the course of overseeing the building, operating and growing of the corporations’ businesses. In more recent years, the concepts of “stakeholders” and “stakeholder interests” have greatly expanded, with the interests generally falling under the umbrella of environmental, social and governance (ESG) matters. [2] Now current and ongoing events, including the COVID-19 pandemic and the increased attention to systemic racism following the killing of George Floyd, add new and increasing complexity for boards of directors as they consider stakeholder interests in the context of navigating their businesses through economic headwinds. Calls from some quarters for boards to focus on these stakeholder interests, while distinguishing them from stockholder interests, have sown confusion and misunderstanding. This article, through stating a series of guiding principles, attempts to “cut through it all” like the Gordian Knot, bring clarity to the discussion and provide real-world guidance for director decision-making.

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Today is the first anniversary of the Business Roundtable (BRT) statement on corporate purpose. The statement, which was described by the BRT as “moving away from shareholder primacy,” was heralded by observers as “an important shift… in corporate America” and a “sea change in terms of how the core purpose of business is defined.” However, in a recent Wall Street Journal op-ed, and in our study The Illusory Promise of Stakeholder Governance on which the op-ed was based, we present evidence that the statement was likely a mere public-relations move rather than a signal of a significant shift in how business operates.

This post focuses on the BRT’s disregard of legal constraints under state corporate law. The post is the third of a series, published around the BRT statement’s first anniversary, aimed at providing Forum readers with a brief account of each of the pieces of evidence on the expected consequences of the BRT statement that our study puts forward. (The first post, which focused on the lack of board approval, is available here. The second post, which focused on the corporate governance guidelines of signatory companies, is available here.)

Disregard of Legal Constraints

The BRT statement proposes a new purpose for public corporations, but it does not discuss or even acknowledge the fact that public companies are subject to different state corporate laws. These state corporate laws vary significantly with respect to the power of directors and executives to embrace stakeholderism. Most importantly, our review indicates that about 70% of the U.S. companies that joined the BRT statement are incorporated in Delaware, which is widely viewed as a state with strong shareholder-centric corporate law.

An article by Leo Strine, who served as the chief justice of the Delaware Supreme Court at the time of the publication of the BRT statement, concludes that “a clear-eyed look at the law of corporations in Delaware reveals that, within the limits of their discretion, directors must make stockholder welfare their sole end,” and that Delaware corporations can consider stakeholder interests “only as a means of promoting stockholder welfare.” Similarly, at a recent roundtable on the subject of Delaware law’s approach to stakeholders, organized by Columbia Law School and Gibson Dunn, the consensus of the participants was in line with Chief Justice Strine’s above view.

The shareholder primacy approach of Delaware law is well summarized by then Chancellor William Chandler in the case of eBay Domestic Holdings, Inc. v. Newmark:

Having chosen a for-profit corporate form … directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of the stockholders. The “Inc.” after the company name has to mean at least that. Thus, I cannot accept as valid … a corporate policy that specifically, clearly and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders…

Given some expressed concerns about the compatibility of stakeholderism with Delaware law, Martin Lipton, a prominent supporter of stakeholderism, co-authored a client memorandum that purports to address “a number of questions [that] have been raised about the legal responsibilities of directors in … taking into account … [stakeholder] interests.” What is most interesting about the memorandum is not what it includes but what it does not. The memorandum cautiously avoids opining that taking into account stakeholder interests beyond what would be useful for shareholder value is permissible under Delaware law.

Therefore, it seems likely that Delaware corporations (and therefore a substantial majority of the companies joining the BRT statement) may not balance the interests of shareholders and stakeholders, or at least would face significant legal issues if they explicitly chose to do so. For present purposes, however, what is most important is that neither the BRT, nor the numerous Delaware companies that joined the BRT statement, acknowledged or addressed this legal issue.

This disregard of the issue is, once again, consistent with the view that the BRT statement was expected to be largely a public-relations move rather than a signal of a significant shift in how corporations treat stakeholders.

I am writing on behalf of the Council of Institutional Investors (CII), a nonprofit, nonpartisan association of U.S. public, corporate and union employee benefit funds, other employee benefit plans, state and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $4 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their families, including public pension funds and defined contribution plans with more than 15 million participants—true “Main Street” investors through their funds. Our associate members include non-U.S. asset owners with about $4 trillion in assets, and a range of asset managers with more than $40 trillion in assets under management.

The purpose of this letter is to provide you with our perspectives on the Department of Labor (DOL) “proposed amendments to the ‘Investment duties’ Regulation under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action” (Proposed Rule).

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Wednesday of next week marks the first anniversary of the Business Roundtable (BRT) statement on corporate purpose. The statement, which was described by the BRT as “moving away from shareholder primacy,” was heralded by observers as “an important shift… in corporate America” and a “sea change in terms of how the core purpose of business is defined.” However, in a recent Wall Street Journal op-ed, we present evidence that the statement was, more likely, a mere public-relations move rather than a signal of a significant shift in how business operates.

The op-ed, Stakeholder Capitalism Seems Mostly for Show, was based on evidence collected in our study The Illusory Promise of Stakeholder Governance. This evidence indicates that corporate leaders should not be expected to make substantial changes in the treatment of stakeholders. This conclusion will be greatly disappointing to some and quite welcome to others. But all should be clear-eyed about what corporate leaders are focused on and what they intend to deliver.

This post is the first of a series, published around the BRT statement’s first anniversary and aimed at providing Forum readers with a brief account of each of the pieces of evidence that we have collected on the expected consequences of the BRT statement. This post will focus on the lack of board approval.

Joining the BRT Statement: Who Made the Decisions?

In assessing the extent to which the BRT statement should be expected to bring about major changes, it is useful to examine whether the decision to join the statement was approved by each company’s board of directors. The most important corporate decisions (such as a major acquisition, the amendment of the by-laws, or an important change in the corporate strategy) require or at least commonly receive approval by a vote at a meeting of the board of directors. Thus, if the commitment expressed by joining the BRT statement had been expected to bring about major changes in a company’s choices and practices, it would have been expected to be approved by the board of directors.

Therefore, to examine this issue, we contacted the public relations offices of 173 companies whose CEOs signed the BRT statement. (The initial signatories of the BRT statement were 181. As of December 17, 2019, we identified 3 additional companies that publicly joined the BRT statement, for a total of 184. Of these 184 companies, we contacted all the 173 companies for which we found a public relations / media inquiries email address on the corporate website.)

We asked each company to indicate who was the highest-level decision-maker who approved the decision to join the BRT statement, whether the CEO, the board of directors, or an executive below the CEO. 48 companies responded to our inquiry. Of the responding companies, 47 companies indicated that the decision was approved by the CEO and not by the board of directors. Only one responding company indicated that the decision was approved by the board of directors. Thus, among responding companies, about 98% had no approval by the board of directors. (We also received two ambiguous responses that we did not include in the total of 48. For example, one company responded that the decision was “a collaborative effort,” declining to specify a particular decision-maker. Also, of the 48 responding companies, two added that while the decision was taken by the CEO, the CEO consulted or “usually consults” with the board.)

To be sure, a majority of the companies declined to answer even after a follow up. Still there is no reason to expect that these companies were more likely than the responding companies to have had the decision approved by the board. Thus, the strong results we obtained for our sample of 48 are telling.

What can explain the decision of CEOs to join the BRT statement without approval by the board of directors? It is implausible that CEOs chose not to seek approval for decisions that they viewed as sufficiently important to merit board consideration. Even “imperial” CEOs are unlikely to disregard the formal location of the board of directors at the top of the corporate pyramid; instead, such CEOs are likely to use their power and influence to get the board to approve the choice they favor.

Similarly, it is implausible that CEOs did not seek board approval because they viewed joining the BRT statement as a matter of personal belief rather than a statement made in their “official” capacity as corporate head. The BRT described the CEO signatories as committing “to lead their companies for the benefit of all stakeholders.” Therefore, the BRT statement did not express a shared personal belief by a group of individuals but a commitment regarding the goals that the companies led by these individuals would pursue.

In our view, the most plausible explanation for the lack of board approval has to do with the way CEOs viewed the content of the statement. According to this explanation, CEOs didn’t regard the statement as a commitment to make a major change in how their companies treat stakeholders. In the absence of a major change, they thought that there was no need for a formal board approval. Indeed, two of the companies that responded to our survey stated that joining the BRT statement reflected an affirmation that the company’s past practices have been consistent with the principles of the BRT statement rather than an expectation that the company would make major changes in its future treatment of stakeholders.

To the extent that this view was widely shared among other signatories to the statement, it can explain well why the decision to join the statement was commonly not approved by the company’s board of directors. In this case, however, the BRT statement merely reflected (i) the CEOs’ positive assessment of how their companies have been treating stakeholders thus far, as well as, importantly, (ii) the CEOs’ expectation that the statement will not lead to substantial changes in how stakeholders are treated.

Thus, the lack of board approval is consistent with and supports the conclusion that the BRT statement was not expected by signatories to bring about major changes.

The study on which this post is based, The Illusory Promise of Stakeholder Governance, is available here.

Alibaba conducted a record-breaking IPO six years ago on the New York Stock Exchange and is now valued at over $500 billion. The firm, founded by Jack Ma and others, is now the most valuable Asian public company, as well as the world’s largest ecommerce company and seventh most valuable firm. In a paper recently posted on SSRN, Alibaba: A Case Study of Synthetic Control, we explain how this giant firm is controlled.

Alibaba is known for its unique governance structure: a majority of Alibaba’s board is nominated or appointed by the so-called Alibaba Partnership, which consists of several dozen individuals. Thus, the Partnership controls Alibaba. However, as Lin and Mehaffy (2016) show, the Partnership itself is effectively controlled by a much smaller Partnership Committee that includes Ma as a perpetual member. Control of Alibaba is therefore in much fewer hands than might first appear.

Our paper digs even deeper into Alibaba’s control arrangements and reveals a surprising fact: Ma, who owns less than 5% of Alibaba, effectively controls Alibaba by himself—control that would persist even if his equity stake declined further. The reason is that Ma’s control over Alibaba is not based on his equity but rather on his control of a different firm, Ant Group.

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The SEC has proposed an amendment to Form 13F that would exempt from filing all money managers holding less than $3.5 billion of “13(f) securities.” The threshold would apply without regard to the fund’s overall size or total assets under management. Increasing the threshold to $3.5 billion from the current cut-off of $100 million would slash the number of reporting filers by 90%, from 5,089 to 550, effectively abolishing Form 13F as a reporting system for most investors, including many activist and event-driven hedge funds, and preserve it only for the largest index funds and asset managers.

Form 13F generally requires investment managers holding more than $100 million of such 13(f) securities (typically Exchange-traded equity securities, certain options and warrants, shares of closed-end investment companies and certain convertible debt securities) to disclose their holdings within 45 days of the end of each quarter, and is often the primary means by which investors, companies and other market participants first learn or verify that an activist hedge fund is accumulating or has accumulated a significant (but less than 5%) position in a target company’s stock. Because many activists do not own $3.5 billion of 13(f) securities, adoption of this revision would permit them to “go dark” and make it significantly more difficult to determine whether an activist, or a “wolf pack” of activists, owns a stake in a company. Indeed, as we have previously discussed, activist “tipping” could well result in only the wolf pack—and not the target company or other shareholders—being aware of the ownership stake until the moment that the activist strike occurs.

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At its core, the director role is primarily one of stewardship rather than execution. While “pay for performance” has become a mantra for executive compensation in the last decade, the concept does not extend in the same way to director pay. Rather, director pay structures are oriented toward compensating for time commitments and leadership. Retainers and per-meeting fees for board and board committee services reflect the time spent on company-related activities. Supplemental retainers for board chairs, lead directors, and board committee chairs reward the additional responsibility of service in leadership positions. To be sure, equity grants are widely used but, rather than being linked to specific performance measures, they are meant more generally to establish an ongoing interest in the long-term prospects of the business.

Yet, today’s corporate directorship is at the forefront of rapidly evolving economic and social changes that are affecting the notion and purpose of the corporation itself. The board slate increasingly represents a diverse array of experiences and viewpoints, while individual directors are asked to exercise judgment and provide coordinated guidance on an expanding set of stakeholder issues. Though compensation is expected to remain rooted in the stewardship function of boards, pay plans will necessarily need to evolve in response to the increased complexity of the independent director role and the level of scrutiny to which it is subject.

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In a much-cited, much-discussed 1970 article the New York Times entitled “The Social Responsibility of Business is to Increase its Profits” the renowned economist Milton Friedman harshly criticized those in the business community who maintained that private enterprises had a mission to promote desirable social ends. What the Times labelled a “Friedman doctrine” reputedly constituted a major turning point in corporate legal theory and corporate governance. In particular, Friedman’s essay has been credited with—or blamed for—launching a still ongoing era of “shareholder primacy” where corporate executives have assumed their job is to maximize shareholder value. In my working paper Stop Blaming Milton Friedman! I show that the historical evidence does not tally with the hype.

Economists Oliver Hart and Luigi Zingales have argued Friedman’s article can “be seen as providing the intellectual foundation for the ‘shareholder value’ revolution.” (The citation for their paper and for all other sources canvassed in this post are available in my working paper.) A Newsweek columnist suggested in 2019 that “for almost 50 years, American CEOs have loosely followed what is known as the Friedman Doctrine.” Oxford management theorist Colin Mayer, a staunch shareholder primacy critic, has said of this “doctrine” “(f)ew social science ideas are both so significant and misconceived as to threaten our existence.” It strains credulity that an entire school of academic thought could have this sort of impact, let alone a single newspaper essay that was not even 3000 words in length. At the very least, those who ascribe to Milton Friedman substantial responsibility for American companies prioritizing shareholder interests make a series of implicit erroneous assumptions about his essay and subsequent developments.

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Corporate purpose is now the focus of a fundamental and heated debate, with rapidly growing support for the proposition that corporations should move from shareholder value maximization to “stakeholder governance” and “stakeholder capitalism.” In a new study, The Illusory Promise of Stakeholder Governance, we critically examine the increasingly influential “stakeholderism” view, according to which corporate leaders should give weight not only to the interests of shareholders but also to those of all other corporate constituencies. We conduct a conceptual, economic, and empirical analysis of stakeholderism and its expected consequences. We conclude that this view should be rejected, including by those who care deeply about the welfare of stakeholders.

Stakeholderism, we demonstrate, would not benefit stakeholders as its supporters claim. To examine the expected consequences of stakeholderism, we analyze the incentives of corporate leaders, empirically investigate whether they have in the past used their discretion to protect stakeholders, and examine whether recent commitments to adopt stakeholderism can be expected to bring about a meaningful change. Our analysis concludes that acceptance of stakeholderism should not be expected to make stakeholders better off.

Furthermore, we show that embracing stakeholderism could well impose substantial costs on shareholders, stakeholders, and society at large. Stakeholderism would increase the insulation of corporate leaders from shareholders, reduce their accountability, and hurt economic performance. In addition, by raising illusory hopes that corporate leaders would on their own provide substantial protection to stakeholders, stakeholderism would impede or delay reforms that could bring meaningful protection to stakeholders. Stakeholderism would therefore be contrary to the interests of the stakeholders it purports to serve and should be opposed by those who take stakeholder interests seriously.

Below is a more detailed overview of the analysis of our paper:

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