Gadinis and Havasy, ‘The Quest for Legitimacy in Corporate Law’

Corporations are increasingly cast in an unexpected role: that of a social reformer. Influential investors and burgeoning social movements are calling on companies to ‘take a stand’ on a variety of controversial social issues and corporate managers are struggling to respond to the new demands of their stakeholders. Retreating into the seeming neutrality of profit maximization and trying to avoid the fray is no longer a viable option. But while corporate initiatives are garnering enthusiasm from some, they are sparking a wave of recriminations from others. Progressives accuse companies of ‘greenwashing’ and not going far enough; conservatives warn that a ‘woke’ and unelected elite is imposing its unpopular values on the public. With the societal implications of their choices laid bare, we argue in this article, corporations are faced with a legitimacy challenge. Thankfully, other legal institutions have developed mechanisms for reaching controversial decisions on core societal issues to improve the legitimacy of their decisions – administrative agencies. We reveal some heretofore unnoticed parallels between administrative law and corporate governance and show how corporate leaders can adjust these tools to their purposes …

Gadinis, Stavros and Havasy, Christopher, The Quest for Legitimacy in Corporate Law (April 11, 2022).

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