Table Of ContentCORPORATE FRICTION
Corporate law in the United States requires directors to
managefirmsintheinterestsofshareholders,whichmeans
neversacrificingprofitsinserviceofotherstakeholdersor
interests.Inthistimely,groundbreakingbook,DavidYosi-
fonarguesthatthisruleof“shareholderprimacy”islogic-
ally, ethically, and practically unsound and should be
replaced by a new standard that compels directors of our
largest corporations to manage firms in a socially respon-
sible way. In addition to summarizing existing debates on
the issue – and giving special attention to the Supreme
Court’s decision inCitizensUnited–Yosifon explores the
problem of corporate patriotism and develops a novel
approach to the relationship between corporate law and
consumer culture. The book’s technical acumen will
appeal to experts, while its engaging prose will satisfy
anyoneinterestedinwhatourcorporatelawdoesandwhat
itshoulddobetter.
David Yosifon is a professor at Santa Clara University
School of Law in Santa Clara, California. He teaches
businesslawandlegalethics.HeisonthefacultyofSanta
Clara University’s Markkula Center for Applied Ethics
and is also a member of the Markkula Center’s Business
Ethics Partnership. Yosifon’s scholarship on corporate
governance and corporate social responsibility has
appeared in numerous law journals, including the North
Carolina Law Review, the Berkeley Business Law Journal,
and the Delaware Journal of Corporate Law. His opinion
pieces have appeared in the New York Times, the San
FranciscoChronicle,andtheSanJoseMercuryNews.
Published online by Cambridge University Press
Published online by Cambridge University Press
Corporate Friction
HOW CORPORATE LAW IMPEDES
AMERICAN PROGRESS AND WHAT
TO DO ABOUT IT
David Yosifon
Santa Clara University School of Law
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DOI:10.1017/9781316890578
©DavidYosifon2018
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Names:Yosifon,DavidG.,1973–author.
Title:Corporatefriction:howcorporatelawimpedesAmericanprogressandwhattodo
aboutit/DavidYosifon,SantaClaraLawSchool.
Description:Cambridge,UnitedKingdom;NewYork,NY,USA:CambridgeUniversityPress,
2018.|Includesbibliographicalreferencesandindex.
Identifiers:LCCN2017057521|ISBN9781107186408(Hardback)|
ISBN9781316637173(Paperback)
Subjects:LCSH:Corporationlaw–Politicalaspects–UnitedStates.|Corporationlaw–Economic
aspects–UnitedStates.|Corporationlaw–Moralandethicalaspects–UnitedStates.
Classification:LCCKF1414.Y672018|DDC346.73/066–dc23
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for Janice
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Published online by Cambridge University Press
CONTENTS
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . page ix
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 Apologies for Our System . . . . . . . . . . . . . . . . . . . 7
2 Critique of Shareholder Primacy . . . . . . . . . . . . . . . 17
3 The Citizens United Gambit in Corporate Theory . . . . . 41
4 The Actual Law of Corporate Purpose. . . . . . . . . . . . 60
5 Corporate Patriotism. . . . . . . . . . . . . . . . . . . . . . 96
6 Corporate Law and the Confusions of Consumer
Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
7 Foreign Models ofCorporate Governance. . . . . . . . . 146
8 A SociallyResponsible Corporate Governance
Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
vii
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Published online by Cambridge University Press
ACKNOWLEDGEMENTS
I want to thank my wife, Janice Kim Yosifon, and our children,
Corianna Kim Yosifon and Joshua Kim Yosifon, for their love and
inspiration. I want to thank my loving parents, Michael and Viola
Yosifon. When we were growing up, your famous line was, “I will
always buy you books.” This one is on me. I want to thank my
brothers, Michael Yosifon, Jr., and Stephen Yosifon. I also want to
thankJongandJungsuhKim,andEuniceandJimKim,mywonderful
family by marriage. And Evan, Oliver, and Eleanor, my nephews and
niece. I am blessed to have you all behind this book.
I want to give special thanks to my great mentor and friend,
Professor Jon Hanson of Harvard Law School. The ideas, techniques,
and ethics he taught me are reflected on every page of this book. His
generosity I am still striving to replicate.
This book reports an intellectual journey that has been aided by
countless friends and strangers. Many of the strangers (and some of
the friends) are in the footnotes. Among the friends, I especially want
tothankDonPolden,LisaKloppenberg,theHonorablePattiB.Saris,
BradJoondeph,PratheepanGulasekaram,GaryNeustadter,Margaret
Russell, Tseming Yang, Eric Wright, Kandis Scott, Nancy Wright,
GeraldUelman,AdriannaDuffy-Horling,DorothyGlancy,Stephanie
Wildman, Marina Hsieh, Allen Hammond, Ken Manaster, Colleen
Chien,AlanScheflin,KirkHanson,JuneCarbone,DavidSloss,David
Friedman, Kerry Macintosh, Stephen Diamond, David Ball, Cookie
Ridolfi, Ellen Kreitzberg, Patty Rauch-Neustadter, William Wood-
ward, Tyler Ochoa, Michelle Oberman, Kyle Graham, Anna Han,
FatherPaulGoda,S.J.,GarySpitko,theRutgerscrew,RobertShank-
lin, the late James Balassone, all my great teachers from the public
schools of Vernon, New Jersey, Lyman Johnson, David Millon, Kent
ix
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x Acknowledgements
Greenfield, Faith Stevelman, David Westbrook, Stephen Bainbridge,
Stefan Padfield, Yawu Miller, Melvin Miller, Joseph Mueller, James
Livingston, John Gillis, Lloyd Gardner, Joseph Singer, Lani Guinier,
Christine Desan, Scott Sandage, Peter Stearns, Joshua Idjadi, Janie
Yoo,Heaven Chee, Alex Frischer,SarahVickers,and Corey Wallace.
IamgratefultoMarySextonandEllenPlattfortheirskillfulassistance
in obtaining research materials.
All errors are mine alone.
Published online by Cambridge University Press
