About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

50 Wake Forest L. Rev. 761 (2015)
The Dangers of Denial: The Need for a Clear-Eyed Understanding of the Power and Accountability Structure Established by the Delaware General Corporation Law

handle is hein.journals/wflr50 and id is 791 raw text is: THE DANGERS OF DENIAL: THE NEED FOR A CLEAR- EYED UNDERSTANDING OF THE POWER AND ACCOUNTABILITY STRUCTURE ESTABLISHED BY THE DELAWARE GENERAL CORPORATION LAW Honorable Leo E. Strine, Jr.* INTRODUCTION There are, as in any intellectual and political tradition, different strands of thought on the center-left of American politics, as well as different approaches to looking at the world. I confess that the one I most admire is clear-eyed, and attempts to make things better by acknowledging how things in fact are, and not how I would wish them to be. In the area that this Essay addresses, Adolf Berle stands as one example of someone who confronted the world as it was and advanced ideas to improve it.' James Madison, Alexander * Leo E. Strine, Jr. is Chief Justice of the Delaware Supreme Court; Austin Wakeman Scott Lecturer on Law and Senior Fellow, Program on Corporate Governance, Harvard Law School; Adjunct Professor of Law, University of Pennsylvania Law School; and Henry Crown Fellow, Aspen Institute. The author thanks Andrew Berni, Elane Boulden, Roberta Romano, Dorothy Shapiro, and Sonia Steinway for their patient and careful help. 1. In a famous debate with E. Merrick Dodd Jr., Adolf Berle contended that if corporate managers were allowed to consider the interests of all constituencies, without being legally bound to any, those fiduciaries would be free from accountability. A. A. Berle, Jr., For Whom Corporate Managers Are Trustees: A Note, 45 HARV. L. REV. 1365, 1367 (1932) (When the fiduciary obligation of the corporate management and 'control' to stockholders is weakened or eliminated, the management and 'control' become for all practical purposes absolute.). Berle was not entirely opposed to a regime that would allow managers to consider a broader set of interests, but argued that it would be imprudent to deviate from the status quo until a system of binding legal regulation emerged that would safeguard against managerial self-interest: Now I submit that you can not abandon emphasis on the view that business corporations exist for the sole purpose of making profits for their stockholders until such time as you are prepared to offer a clear and reasonably enforceable scheme of responsibilities to someone else. . . . Either you have a system based on individual ownership of property or you do not. If not-and there are at the moment plenty of reasons why capitalism does not seem ideal-it becomes necessary to present a system (none has been presented) of law or government, or both, by which responsibility for control of national wealth and income is so apportioned and enforced that the community as a whole, or at 761

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most