Corporate Governance Shell Games — The Business Roundtable gets caught pocketing the pea

In August of last year, a Business Roundtable press release proudly announced that the “Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans.’”

Roundtable statements carry weight because the Roundtable comprises over 180 CEOs of global companies. This particular statement presented itself as a big deal because it purported to shift the underlying purpose of corporations from maximizing shareholder value to creating value for all stakeholders.

In a Wall Street Journal Op/Ed, Harvard Law School professor Lucian Bebchuk recently challenged the sincerity of this press release. He noted that of the approximately 184 companies whose CEOs had signed or endorsed this statement, only one company had had the statement approved by the Board of Directors, a corporation’s highest policy-making body.

You did’t need tenure at Harvard to suspect a crooked shell game, though: Roundtable CEOs run global companies: if they really wanted to move from serving shareholders to serving stakeholders, why limit the benefits to “All Americans”?

As I discuss in Chapter 5 of my new business-ethics book, there’s a legitimate debate on what the end goal of a corporation should be. But, there’s no excuse for the Business Roundtable running a shell game with no pea.


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