This paper begins a larger project – to develop a principled basis for characterizing what does and does not constitute bad corporate behavior. The paper constructs and argues for three (admittedly highly contestable) categories: repugnant business models, which elicit outrage (such as the recent dramatic price rise for certain lifesaving drugs), models that reflect clashes in fundamental values between, typically, paternalism and autonomy (such as developing and promoting hyperpalatable foods), and finally, models that elicit unwarranted and self-serving outrage (such as surge pricing). One aim is to influence corporate behavior. If Repugnant Business Models as a concept can be made salient, shareholder proposals that ask companies to consider what they are doing to ensure that they don’t have such things, or judges or regulators taking the characterization and the laxity of a company’s efforts in preventing such things into account in determining how they treat the company, might result. Lawmakers, too, might be prodded to act. Another aim is to influence reactions to corporate behavior – not just behavior that is arguably bad but also behavior that elicits unwarranted outrage. Perhaps being able to articulate a principled rationale as to why outrage is unwarranted will enable companies with such models to put up a better defense when the models are attacked.

Read the full article.

This article originally appeared in Washington and Lee Law Review.

Claire A. Hill, Repugnant Business Models: Preliminary Thoughts on a Research and Policy Agenda, 74 Wash. & Lee L. Rev. 973 (2017), http://scholarlycommons.law.wlu.edu/wlulr/vol74/iss2/15

Claire A. Hill

Associate Reporter, Compliance, Risk Management, and Enforcement

Claire Hill is the James L. Krusemark Chair in Law at University of Minnesota Law School. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. She is the founding director of the Law School’s Institute for Law and Rationality, and the associate director of its Institute for Law and Economics. She is also an affiliated faculty member of the University’s Center for Cognitive Sciences. Before becoming a law professor, she practiced corporate law at several law firms. Her research interests include corporate governance, capital structure, structured finance, rating agencies, secured debt, contract theory, law and language, and behavioral economics.

0 Comments

Submit a Comment

Your email address will not be published.