Crisis, rescue, and corporate social responsibility under American corporate law

Abstract

When a board is faced with a choice of aiding the public or government during a crisis, or more generally any corporate social responsibility initiative, well established doctrines of American corporate law can protect directors from legal liability in a shareholder derivative lawsuit. A hallmark trait of the public corporation is a separation of ownership and control (Berle & Means, 1932). Accordingly, managers have great authority over corporate assets. Delaware corporate law provides that “[t]he business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors.”² The board has the authority to manage the “business and affairs” of the corporation, which in the judgment of the board may include corporate social responsibility initiatives and decisions based thereon.

Citation

Rhee, R.J. (2010), "Crisis, rescue, and corporate social responsibility under American corporate law", Sun, W., Stewart, J. and Pollard, D. (Ed.) Reframing Corporate Social Responsibility: Lessons from the Global Financial Crisis (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 1), Emerald Group Publishing Limited, Leeds, pp. 127-144. https://doi.org/10.1108/S2043-9059(2010)0000001012