A Necessary Social Evil: The Indispensability of the Shareholder Value Corporation

This symposium article critically evaluates the developing Post-Shareholder-Value (PSV) paradigm in corporate governance scholarship and practice with particular reference to Professor Colin Mayer’s influential theory of the corporation as a unique, long-term “commitment device.” The article’s positive claim is that, while evolving PSV institutional mechanisms such as benefit corporations and dual-class share structures are generally encouraging from a social perspective, there is cause for skepticism about their capacity to become anything more than a niche or peripheral feature of the U.S. public corporations landscape. This is because such measures, despite their apparent reformist potential, are still ultimately quasi-contractual and thus essentially voluntary in nature, meaning that they are unlikely to be adopted in a public corporations context except in extraordinary instances. This Article’s normative claim is that, while in many respects the orthodox shareholder-oriented corporate governance framework may be a social evil, it is nonetheless a necessary evil, which U.S. worker–savers implicitly tolerate as the effective social price for sustaining a system of nonoccupational income provision outside of direct state control. Accordingly, pending fundamental reform of the broader social-institutional context to the shareholder-oriented corporation, the key features of the evolving PSV governance model should remain quasi-contractual as opposed to being placed on any sort of mandatory regulatory footing.