Abstract 

Corporations are increasingly stepping beyond traditional corporate social responsibility into a more assertive role in public affairs — a phenomenon this paper frames as “corporate governing”. This includes two intertwined strands: corporate socioeconomic advocacy, where firms take positions on politically or socially contested issues, and government substitution, where they step in to deliver functions traditionally reserved to public authorities. These practices respond to policy failures but raise difficult questions about legitimacy, accountability, and the proper boundaries of corporate power in a democracy.

This paper argues that while corporate governing can advance social progress and protect corporate value, it also risks bypassing democratic processes and concentrating policymaking authority in structurally unaccountable actors. The legal framework, especially fiduciary duties and the business judgment rule, largely tolerates corporate governing so long as it can be rationalized as consistent with shareholder interests. However, this framework is ill-equipped to address the broader societal consequences of corporations shaping public policy agendas.

Against this background, this paper explores possible reforms, including enhanced transparency, procedural safeguards, and reconsideration of board and shareholder oversight of corporate advocacy. Ultimately, it suggests that neither corporate law nor market discipline alone can fully resolve the tensions raised by corporate governing. Addressing its risks requires a broader policy toolkit and, more fundamentally, a reinvigoration of democratic institutions capable of reclaiming public policymaking from private hands.

Paper can be downloaded here.

Practicalities

This event will be a hybrid event. The seminar will take place in Roeterseiland campus (REC) building A, room number A3.08, and will also be streamed online via Zoom.  

About the speaker 

Matteo Gatti is Professor of Law at Rutgers Law School and Research Member of the European Corporate Governance Institute. His research on corporate law and political economy has appeared in leading journals and is cited in legal and policy literature. His book, "Corporate Power and the Politics of Change", is forthcoming with Cambridge University Press.

About ACLE

The Amsterdam Center for Law and Economics (ACLE) is a joint initiative of the Faculty of Economics and Business and the Faculty of Law at the University of Amsterdam. The objective of the ACLE is to promote high-quality interdisciplinary research at the intersection between law and economics.