Corporate Stakeholders, Choice Procedures, and Committees

The author critiques Ronald Daniels' article, Must Boards Go Overboard? An Economic Analysis of the Effects of Burgeoning Statutory Liability on the Role of Directors in Corporate Governance. Having shown that increased directors' liability is not the obvious solution to an apparent problem, Daniels leaves us with no answer to the call for more corporate social responsibility. One way that does not depend so much on a regime of ex post enterprise liability is to introduce a socially responsive ex ante governance regime into the corporate boardroom, one which allows different corporate stakeholders a right to participate in corporate decision-making up front. This is what Stanley Beck and others have recommended in their work, and in this comment the author provides an assessment of the feasibility of this broader form of corporate governance. Stakeholder participation in corporate decision-making could take place at either the board or committee lever. However, the author concludes that, because of certain problems of collective choice, the committee system is not so much an attractive alternative to the overall design of more representative corporate boards, as Beck sometimes suggests in his work, as it is an essential complement to any such structural change