Almost 51 years ago, on September 13, 1970, Milton Friedman published an essay in The New York Times with a title that captured his thesis that “The Social Responsibility Of Business Is to Increase Its Profits.”  This shareholder value maximization metric for evaluating the legal and financial fiduciary duties of corporate officers has served as the dominant paradigm for defining the purpose of the corporation both before and certainly for the fifty years after publication of Friedman’s influential essay.  Yet, on August 19, 2019 – nearly two years ago from the date of the event – the powerful Business Roundtable attempted to effect a dramatic shift away from the purpose of the corporation being defined by the single metric of shareholder wealth maximization.  It released what it called a “new Statement on the Purpose of a Corporation signed by 181 CEOs who commit to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.”  This move was received with both applause and condemnation, each of which continue two years later.  The Law & Economics Center’s panel of corporate governance experts evaluated the economic and legal arguments involved in the debate over the proper purpose of the corporation and reflect on the state of the debate two years after the Business Roundtable’s attempt to erase the Friedman doctrine and redefine corporate purpose.

Panelists:
Lisa Fairfax
Presidential Professor and Co-Director, Institute for Law and Economics
University of Pennsylvania Carey Law School

Donald J. Kochan
Professor of Law and Deputy Executive Director, Law & Economics Center
George Mason University Scalia Law School

Robert T. Miller
F. Arnold Daum Chair in Corporate Finance and Law
University of Iowa College of Law

Roberto Tallarita
Lecturer on Law, and Associate Director of the Program on Corporate Governance
Harvard Law School

Moderator:
The Honorable David J. Porter
Circuit Judge
U.S. Court of Appeals for the Third Circuit