Published: June 2007
The ultimate purpose of corporations is to make profit for their owners or “shareholders,” and this is not always a good thing for society, argues Kent Greenfield, a professor of law and author of The Failure of Corporate Law: Fundamental Flaws and Progressive Possibilities (University of Chicago Press, 2006).
A faculty member since 1995 and the 2003-04 Boston College Law Teacher of the Year, Greenfield “presents a stunning critique of the shareholder supremacy theory of corporate law, complete with practical and progressive law reform proposals designed to get so-called public corporations back into the business of promoting the public interest,” writes Joseph William Singer, a law professor at Harvard University. Greenfield asserts that current laws, which require corporations to act primarily on behalf of owners’ interests to maximize profits, hurt other corporate “stakeholders”—employees, consumers, the local community, and society at large. He suggests changing corporate governance norms to reflect the principle that “the ultimate purpose of corporations should be to serve the interests of society as a whole.”
In an interview with @BC, Greenfield expounds on the themes of his book by explaining the current status of corporate law in America, presenting the need for change, and describing his proposed reforms.