I just finished reading Professor David G. Yosifon's new article, The Law of Corporate Purpose (September 28, 2012), which is available at SSRN: http://ssrn.com/abstract=2154031. The abstract follows:
Delaware corporate law requires directors to manage firms for the benefit of the firm’s shareholders, and not for any other constituency. Delaware jurists have been clear about this is in their case law, and they are not coy about it in extra-judicial settings, such as in speeches directed at law students and practicing members of the corporate bar. Nevertheless, the reader of leading corporate law scholarship is continually exposed to the scholarly assertion that the law is ambiguous or ambivalent on this point, or even that case law affirmatively empowers directors to pursue non-shareholder interests. It is shocking, and troubling, for corporate law scholarship to evince such confusion about the most important black letter matter in the field. While I am a critic of the “shareholder primacy norm” in corporate governance, I am nevertheless convinced that shareholder primacy is the law. In fact, the critical vantage and reformative program that I have pursued in other writing presupposes that shareholder primacy is currently the law. This article is therefore dedicated both to providing doctrinal clarification on the law of corporate purpose, and to vindicating a key presumption in a broader normative agenda.
It's a very effective critique of arguments made by scholars like Einer Elhauge and Lynn Stout that, as the latter put it, “The notion that corporate law requires directors . . . to maximize shareholder wealth simply isn’t true.” Of course, unlike Yosifon, I am not a critic of the shareholder wealth maximization norm. To the contrary, I argued at length in The New Corporate Governance in Theory and Practice that shareholder wealth maximization both is and ought to be the law.