THE CORPORATE LAW DILEMMA AND THE ENLIGHTENED SOVEREIGN CONTROL PARADIGM: IN SEARCH OF A NEW LEGAL FRAMEWORK

This Article is centered on the proposal of a new model of corporate decision-making: the enlightened sovereign control paradigm. In revisiting the long-standing academic debate on the corporate objective, typically enshrined in the dichotomy between shareholder value and stakeholder theory, a critique of these existing models is put forward. In particular, it questions the ability of the existing theories to take account of the complex and multidimensional risks that are created by the company which affect different constituencies both inside and outside the company. While the global financial crisis of 2008 reignited the urgency to further define an appropriate legal framework for decision-making in large public firms, there have not been many substantial changes within the legal and business circles regarding the way this problem is treated. The Article is grounded in the recognition of the historical quest to find a legitimization of corporate power, and attempts to create a system of public accountability that could justify managerial decision-making. These tasks have become ever more central in the wake of the many scandals that exploded from the early 2000s to the present day, showing that many constituencies can suffer from the externalities of corporate activities. While much has been written on this topic, more recent events illustrate the need to find an alternative approach to the question of the corporate objective. This is because of its centrality in defining legal strategies to control managerial behavior, but also because of the shortcomings of existing paradigms. The asserted urgency to find a new theoretical model to govern managerial actions and coordinate them with the interests of different constituencies leads to the proposition of a new theory. The enlightened sovereign control paradigm flows from a pluralistic theoretical foundation and provides a novel, legal, and institutional framework for the balancing of different interests that are affected by the behavior of large public corporations