Stakeholder Capitalism in the Time of COVID
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Stakeholder Capitalism in the Time of COVID
Lucian A. Bebchuk,t Kobi Kastieltt & Roberto Tallaritattt
This Article tests the claims of supporters of stakeholder capitalism
(stakeholderism') in the context of the COVID pandemic. Supporters of
stakeholderism advocate encouraging and relying on corporate leaders to use
their discretion to serve stakeholders such as employees, customers, suppliers,
local communities, and the environment. The pandemic followed and was
accompanied by peak support for, and broad expressions of commitment to,
stakeholderism from corporate leaders. Nonetheless, and even though the
pandemic heightened risks to stakeholders, we document that corporate leaders
negotiating deal terms failed to look after stakeholder interests.
We conduct a detailed examination of all the $JB+ acquisitions of public
companies that were announced from April 2020 to March 2022, totaling 122
acquisitions with an aggregate consideration exceeding $800 billion. We find
that deal terms provided large gains for the shareholders of target companies,
as well as substantial private benefits for corporate leaders. However, although
t James Barr Ames Professor of Law, Economics, and Finance, and Director of the Program on
Corporate Governance, Harvard Law School.
?? Associate Professor, Tel Aviv University Faculty of Law; Senior Research Fellow and
Lecturer on Law, Harvard Law School.
t?? Lecturer on Law, Terence M. Considine Senior Fellow in Law and Economics, and
Associate Director of the Program on Corporate Governance, Harvard Law School.
We would like to thank Raffaele Felicetti, Alec Johnson, Ariella Kahan, Peter Morgan, Zoe Piel
for their excellent research assistance. We are especially grateful to Roee Amir and Anna Toniolo for their
invaluable research assistance. We have also benefited from the suggestions of John Coates, Alma Cohen,
Bob Eccles, Jared Ellias, Jesse Fried, Scott Hirst, Ron Masulis, Colin Mayer, Mark Roe, Ethan Rouen,
and event participants in three Harvard Law School workshops, the London Business School debate on
stakeholder capitalism, and a Columbia Law School conference. The Harvard Law School Program on
Corporate Governance and the John M. Olin Center for Law, Economics and Business provided financial
support.
Although we provide substantial detail on our findings in the body of this Article, a large Appendix
we have placed on SSRN provides additional documentation that was not included here due to space
constraints. Lucian A. Bebchuk, Kobi Kastiel & Roberto Tallarita, Stakeholder Capitalism in the Time of
COVID: Appendix (Harvard L. Sch. John M. Olin Center Discussion Paper No. 1089),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4298646 [https://perma. cc/6UP3-UTV8].
This Article is part of the research project on stakeholder capitalism of the Harvard Law School
Program on Corporate Governance. Companion articles written as part of the project are Lucian A.
Bebchuk & Roberto Tallarita, The Illusory Promise of Stakeholder Governance, 106 CORNELL L. REV.
91 (2020); Lucian A. Bebchuk, Kobi Kastiel & Roberto Tallarita, For Whom Corporate Leaders Bargain,
94 S. CAL. L. REV. 1467 (2021); Lucian A. Bebchuk and Roberto Tallarita, Will Corporations Deliver
Value to All Stakeholders?, 75 VAND. L. REV. 1031 (2022); Lucian A. Bebchuk, Kobi Kastiel & Roberto
Tallarita, Does Enlightened Shareholder Value Add Value?, 77 Bus. Law. 1 (2022); and Lucian A.
Bebchuk and Roberto Tallarita, The Perils and Questionable Promise ofESG-Based Compensation 48 J.
CORP. L. (forthcoming 2023).
60](ViewImageLocal?handle=hein.journals/yjor40&div=4&collection=&method=preview&ext=.png&size=3)
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Stakeholder Capitalism in the Time of COVID
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