What is the purpose of a business corporation? For much of the past three decades, observers and even many business leaders embraced the view that corporations “belong” to their shareholders and that the legal responsibility of corporate directors and executives is to single-mindedly seek to maximize shareholder wealth. Today, experts and laypersons alike increasingly recognize this view of business to be both mistaken and harmful.
As a purely factual matter, corporate law does not require directors and executives to try and maximize profits or share price. Although a business must be profitable to survive, corporate law grants executives and directors of business corporations the discretion to pursue any lawful purpose as a business ...
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