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36 J. Corp. L. 59 (2010-2011)
Enlightened Shareholder Value: Corporate Governance beyond the Shareholder-Stakeholder Divide

handle is hein.journals/jcorl36 and id is 61 raw text is: Enlightened Shareholder Value: Corporate Governance Beyond the Shareholder-Stakeholder Divide Virginia Harper Ho* I. INTRODUCTION ..................................................... 61 II. INSTITUTIONAL INVESTOR ACTIVISM: PANDORA'S Box?............................ 64 A. Institutional Investor Power and the Rise of Shareholder Democracy ............. 65 B. The Problem of Stakeholders .......................... .......... 69 III. STAKEHOLDERS UNDER CORPORATE LAW................................ 71 A. Shareholder Wealth Maximization ................................ 73 B. Control of the Firm ............................. ..... ......... 76 C. Shareholder Preeminence ................................. ..... 76 IV. DEFINING AND DRIVING ENLIGHTENED SHAREHOLDER VALUE: PATHWAYS BEYOND THE SHAREHOLDER-STAKEHOLDER DIVIDE........................ 77 A. Enlightened Shareholder Value Under the UK. Companies Act....................... 77 B. Investor-Driven Enlightened Shareholder Value....................... 80 1. Expressions ofEnlightened Shareholder Value: ESG Risk Management & the United Nations Principles for Responsible Investment................ 80 2. The ESG Rationale. .............................. ........... 82 a. Firm-Level Risk Management and Financial Performance .. .......... 83 b. Portfolio-Level Risk Management and Financial Performance............... 84 3. Implementation & Difusion. ........................ ........... 86 a. Institutional Investors & Enlightened Shareholder Value........................ 87 b. Translating Enlightened Shareholder Value to Firms .................... 90 i. Litigation ....................................... ..... 92 ii. Voting & Engagement ......................... .......... 93 V. SHAREHOLDER ENLIGHTENMENT AND THE CORPORATE OBJECTIVE FUNCTION......... 95 A. Enlightened Shareholder Value: Revising the Corporate Objective Function ..... 96 * Associate Professor, University of Kansas School of Law, vharperho@ku.edu. Many thanks are due to Mark Roe, Cynthia Williams, Christine Hurt, Christopher Drahozal, Brian Broughman, Darian Ibrahim, Timothy Lynch, Bernard Sharfman, David Rosenberg, Natalie Beinisch, Josephine Sandler, Lydia Chan, participants at the University of Illinois Urbana-Champaign Big Ten Aspiring Scholars Conference, Aug. 2009, and participants at the Loyola University of Chicago Conference on Risk Management and Corporate Governance, Oct. 2009, for their generous comments on earlier drafts. All remaining errors are mine alone.