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Lee, Ian B. --- "The Role of the Public Interest in Corporate Law" [2012] ELECD 462; in Hill, A. Claire; McDonnell, H. Brett (eds), "Research Handbook on the Economics of Corporate Law" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on the Economics of Corporate Law

Editor(s): Hill, A. Claire; McDonnell, H. Brett

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848449589

Section: Chapter 7

Section Title: The Role of the Public Interest in Corporate Law

Author(s): Lee, Ian B.

Number of pages: 25

Extract:

7. The role of the public interest in corporate law
Ian B. Lee



The concept of the `public interest' has little, if any, direct doctrinal presence in corporate law
and, for the majority of corporate law scholars, this is as it should be. In addition, the concept
of the public interest does not play a prominent role in most normative corporate law schol-
arship. Although few scholars would deny that corporate law should ultimately serve the
public interest (that it should maximize social welfare, in one manner of expressing this idea),
it is largely taken for granted that the way in which corporate law advances the public inter-
est is by facilitating transactions in which individuals pursue their private interest. As a result,
when evaluating actual or proposed corporate law provisions, analysts do not typically return
to the basic question whether the provision is in the public interest; rather, the question asked
is whether the provision serves the interests of the participants in corporations, especially
shareholders, in particular by minimizing their costs of transacting with one another.
A challenge to the dominant view comes from a `progressive' school of thought (Mitchell
1995) according to which the public interest should play a greater role within corporate law
doctrine and corporate law should constrain, in the name of the public interest, the pursuit by
corporate actors of their private interest. Progressive policy prescriptions include, depending
on the author, reforms to the mandate and manner of selection of the board of directors and
...


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