Process as currency with the courts: judicial scrutiny of directors' decisions

Jonathan Macey and Geoffrey Miller

International Journal of Corporate Governance, 2009, vol. 1, issue 4, 337-365

Abstract: A critical issue in corporate governance around the world is how much deference should be allocated to boards of directors and management. This paper addresses this question from a positive normative perspective and concludes that the amount of deference accorded to corporate decisions (and to decisions made in other contexts) is a function of the amount of process that boards and managers have used in arriving at such decisions. Courts and legislatures defer to decisions by corporate boards of directors when those boards have constructed and utilised a procedural infrastructure for their decision making that courts deem satisfactory.

Keywords: corporate governance; corporate finance; deference; boards of directors; judicial review; administrative law; corporate decisions; decision making; procedural infrastructure. (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcgov:v:1:y:2009:i:4:p:337-365

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