Purpose of a Corporation

Section 9 of 9

Footnotes

Bluebook 21st-edition format. Explanatory note appears after each citation, set off by an em-dash, per SMU CGI standing citation protocol.

Long-form source as of MAY 28, 2026

Footnotes and primary sources
  1. Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919), law.justia.com/cases/michigan/supreme-court/1919/204-mich-459-170-n-w-668-1919.html. Canonical primary-source case. The Michigan parallel citation is 204 Mich. 459 (1919); the Northwestern Reporter pin cite of the “primarily for the profit of the stockholders” dictum is 170 N.W. 668, 684. ↑
  2. Id. at 684. Pin-cited dictum quoted in the block above. Note that the court ordered payment of a $19.275 million special dividend but expressly declined to enjoin the planned River Rouge expansion, leaving the company's discretionary use of retained earnings intact. ↑
  3. Mark J. Roe, Dodge v. Ford: What Happened and Why?, 74 Vand. L. Rev. 1755 (2021), scholarship.law.vanderbilt.edu/vlr/vol74/iss6/6; ECGI Law Working Paper No. 619/2021, SSRN 3943559. Reconceptualizes Ford's dividend cut around three industrial-organization facts: Ford's monopoly position in mass-market autos, the just-begun River Rouge expansion, and the management-labor tension that motivated Ford's $5 day. Read as a controlled-shareholder oppression case, the court's “primacy” dictum is doing controller-fiduciary work, not announcing a freestanding stakeholder prohibition. ↑
  4. Dodge, 170 N.W. at 685 (declining to enjoin the planned River Rouge expansion). Often overlooked in the casebook tradition. The same Michigan court that ordered the dividend left the operational decision — massive vertically integrated investment that would benefit workers, suppliers, and customers as much as shareholders — squarely within the directors' business judgment. ↑
  5. Adolf A. Berle, Jr., Corporate Powers as Powers in Trust, 44 Harv. L. Rev. 1049, 1049 (1931), jstor.org/stable/1331341. The classical statement of shareholder primacy as a fiduciary-law proposition. Berle frames the question as one about the legitimate scope of delegated corporate power. ↑
  6. E. Merrick Dodd, Jr., For Whom Are Corporate Managers Trustees?, 45 Harv. L. Rev. 1145, 1148 (1932), jstor.org/stable/1331697. The original stakeholder-pluralist reply. Dodd's frame is institutional, not contract-theoretic: the corporation is a public-purpose institution whose managers are trustees for a wider set of constituencies than the shareholders. ↑
  7. A.A. Berle, Jr., The 20th Century Capitalist Revolution 169 (Harcourt, Brace 1954). Berle's mid-career concession that Dodd's reading had become the dominant institutional understanding — though Berle continued to insist that fiduciary law still required a shareholder-orienting backstop to prevent managerial unaccountability. ↑
  8. A.P. Smith Mfg. Co. v. Barlow, 98 A.2d 581, 586 (N.J. 1953), law.justia.com/cases/new-jersey/supreme-court/1953/13-n-j-145-0.html. The post-war charitable-power case. The court read N.J. Stat. Ann. § 14:3-13 (the corporate-charitable-contributions statute) and the general corporate-power statute together; held that even absent specific statutory authority the donation would have been valid as a matter of common-law corporate power. ↑
  9. Barlow v. A.P. Smith Mfg. Co., 346 U.S. 861 (1953) (mem.). U.S. Supreme Court dismissal for want of a substantial federal question. The dismissal left the New Jersey holding intact as state law. ↑
  10. Shlensky v. Wrigley, 237 N.E.2d 776, 781 (Ill. App. Ct. 1968), law.justia.com/cases/illinois/court-of-appeals-first-appellate-district/1968/95-ill-app-2d-173-237-n-e-2d-776-1968.html. The Wrigley Field night-baseball case. Illinois Appellate Court (First District) deference to business judgment; pin cite to the “no fraud, illegality or conflict of interest” holding. ↑
  11. Revenue Act of 1935, ch. 829, § 102(c), 49 Stat. 1014, 1016 (current version codified at I.R.C. § 170(c)) (federal authorization for the corporate charitable-contributions deduction). The federal tax-code authorization that, together with the state-law cases cited, made corporate philanthropy a routine governance activity from the mid-twentieth century forward. ↑
  12. Milton Friedman, The Social Responsibility of Business is to Increase its Profits, N.Y. Times Mag., Sept. 13, 1970, at 32, nytimes.com/1970/09/13/archives. The full essay. The closing paragraph — the “rules of the game” formulation quoted in the pull-quote in Section 3 — appears at page 33 of the original magazine and is reproduced from Friedman's own Capitalism and Freedom (Univ. Chi. Press 1962). ↑
  13. Id. (emphasis added). Friedman's actual operative claim is bounded by two qualifiers — law and ethical custom — that are routinely dropped from secondary characterizations of “the Friedman doctrine.” ↑
  14. See Milton Friedman, Capitalism and Freedom 133 (Univ. Chi. Press 1962). The source of Friedman's closing quotation in the 1970 essay. The book chapter (“Social Responsibility of Business and Labor”) frames the argument as an agency-theoretic one about decision rights inside the firm. ↑
  15. Stephen M. Bainbridge, Director Primacy: The Means and Ends of Corporate Governance, 97 Nw. U. L. Rev. 547 (2003), SSRN 300860. The formalization of the director-primacy / shareholder-wealth-maximization pair. Bainbridge's claim is that decision rights are vested in the board (the means question), while the board's fiduciary duty runs to the corporation and its stockholders as residual claimants (the ends question). ↑
  16. Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 182 (Del. 1986), law.justia.com/cases/delaware/supreme-court/1986/506-a-2d-173-1.html. The pin-cited “preservation as a corporate entity to maximization of the company's value at a sale” holding. Note the narrow scope: the duty shift turns on inevitability of breakup or change of control. ↑
  17. Id. at 182 (“rationally related benefits accruing to the stockholders”). The instrumental-only qualifier on stakeholder consideration in the sale-of-control posture — the doctrinal hinge that distinguishes Revlon from the clear-day permissive regime. ↑
  18. Am. Law Inst., Principles of Corporate Governance: Analysis and Recommendations § 2.01 (Am. Law Inst. 1994), ali.org/publications/show/principles-corporate-governance-analysis-and-recommendations. Section 2.01(a) sets the presumptive shareholder-gain objective; § 2.01(b) authorizes consideration of ethical considerations and reasonable charitable / humanitarian / educational / philanthropic contributions. The ALI text is the most widely cited statement of the post-war doctrinal settlement. ↑
  19. Business Roundtable, Statement on Corporate Governance 3 (Sept. 1997). The 1997 BRT statement, quoted in Bebchuk & Tallarita, Illusory Promise, 106 Cornell L. Rev. 91, 105 n.32 (2020). The 1997 text is the institutional bookend that the 2019 Statement was rhetorically designed to displace. ↑
  20. Business Roundtable, Statement on the Purpose of a Corporation (Aug. 19, 2019), opportunity.businessroundtable.org/...BRT-Statement-on-the-Purpose-of-a-Corporation-with-Signatures.pdf. The 181-signatory August 2019 Statement; the official December 2019 release adds three additional signatories for a total of 184 (per Bebchuk & Tallarita's audit, footnote 26 below). Five fundamental commitments to customers, employees, suppliers, communities, and shareholders, in that order. ↑
  21. Lynn A. Stout, The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler 2012), bkconnection.com; Margaret M. Blair & Lynn A. Stout, A Team Production Theory of Corporate Law, 85 Va. L. Rev. 247 (1999), jstor.org/stable/1073662. The team-production reformulation of corporate-law theory. Blair & Stout argue the board's role is to mediate among multiple firm-specific-asset-contributing constituencies, not solely to maximize stockholder value. ↑
  22. Colin Mayer, Prosperity: Better Business Makes the Greater Good (Oxford Univ. Press 2018), global.oup.com/academic/product/prosperity-9780198824008. Mayer's institutional reframing of the corporation as an entity organized to produce “profitable solutions to problems of people and planet,” with implications for corporate-law architecture rather than just managerial discretion. ↑
  23. Oliver Hart & Luigi Zingales, Companies Should Maximize Shareholder Welfare Not Market Value, 2 J.L. Fin. & Acct. 247 (2017), doi.org/10.1561/108.00000022. The formal model that preserves a single-objective fiduciary regime by recasting the objective as shareholder welfare (including non-pecuniary preferences) rather than market value. Distinct from pluralistic stakeholderism precisely because the principal remains the shareholder, with broader preferences. ↑
  24. Alex Edmans, Grow the Pie: How Great Companies Deliver Both Purpose and Profit (Cambridge Univ. Press 2020), cambridge.org/core/books/grow-the-pie. Edmans's argument is principally empirical: high-purpose strategies, properly designed, generate long-term value rather than trading it off. He is explicit that his framework is not a pluralistic-stakeholder fiduciary regime; it is an enlightened-shareholder-value position. ↑
  25. Lucian A. Bebchuk & Roberto Tallarita, The Illusory Promise of Stakeholder Governance, 106 Cornell L. Rev. 91, 95 (2020), SSRN 3544978. Pin cite to the article's affirmative thesis. The article also documents the 1997 BRT shareholder-primacy statement (id. at 105 n.32) and presents the audit results reproduced in Section 9 and footnote 26 below. ↑
  26. Lucian A. Bebchuk & Roberto Tallarita, The Illusory Promise of Stakeholder Governance, 106 Cornell L. Rev. 91, 116–26 (2020), SSRN 3544978 (BRT-signatory-survey and corporate-governance-guidelines findings); Lucian A. Bebchuk & Roberto Tallarita, Was the Business Roundtable Statement on Corporate Purpose Mostly for Show? – (1) Evidence from Lack of Board Approval, Harv. L. Sch. F. on Corp. Governance (Aug. 12, 2020), corpgov.law.harvard.edu; Lucian A. Bebchuk & Roberto Tallarita, Was the Business Roundtable Statement Mostly for Show? – (2) Evidence from Corporate Governance Guidelines, Harv. L. Sch. F. on Corp. Governance (Aug. 18, 2020), corpgov.law.harvard.edu; see also Lucian A. Bebchuk & Roberto Tallarita, Will Corporations Deliver Value to All Stakeholders?, 75 Vand. L. Rev. 1031 (2022), SSRN 3899421. Direct source for the numbers in Figure 4: 184 signatories (181 initial Aug. 19, 2019 + 3 added by Dec. 17, 2019, per id. at 117 n.73); 173 contacted; 48 substantive responses; 47 reported that the BRT-joining decision was made by the CEO alone, with only 1 reporting board approval (id. at 116–17). The corporate-governance-guidelines audit was conducted on a separately constructed 20-company “BRT Board Sample” (id. at 124–25; Aug. 18, 2020 Harv. Forum post): 10 of those 20 companies amended their governance guidelines after the Statement; 9 of those 10 made no changes to their corporate-purpose formulation; only 1 (S&P Global) added stakeholder-related language, and even that addition framed stakeholder consideration as a means of advancing shareholder interests. The companion 2022 Vanderbilt article extends the analysis to acquisition agreements. ↑
  27. Stephen M. Bainbridge, The Profit Motive: Defending Shareholder Value Maximization (Cambridge Univ. Press 2023), cambridge.org/core/books/profit-motive; see also Stephen M. Bainbridge, The Business Judgment Rule as Abstention Doctrine, 57 Vand. L. Rev. 83 (2004), SSRN 429260. Book-length defense of shareholder-value maximization paired with the 2004 article that develops the abstention reading of the business-judgment rule. Together they constitute the principal contemporary doctrinal defense of the operative Delaware regime. ↑
  28. Leo E. Strine, Jr., Our Continuing Struggle with the Idea That For-Profit Corporations Seek Profit, 47 Wake Forest L. Rev. 135, 147 (2012), SSRN 2576389. Pin cite to Strine's “sole end” / “means of promoting stockholder welfare” framing — the realist Delaware-law statement that organizes the contemporary doctrine. Strine's position is that the operative question for an ordinary Delaware corporation is whether stakeholder consideration can be honestly framed as long-term-stockholder-welfare advancing, not whether stakeholders can be balanced as independent ends. ↑
  29. David G. Yosifon, The Law of Corporate Purpose, 10 Berkeley Bus. L.J. 181, 191–200 (2014), digitalcommons.law.scu.edu/facpubs/555. Pin-cited synthesis of the form-and-posture structure of the doctrine. Yosifon also offers the cleanest restatement of why eBay's “Inc.” passage controls the form-specificity question. ↑
  30. eBay Domestic Holdings, Inc. v. Newmark, 16 A.3d 1, 34 (Del. Ch. 2010) (Chandler, Ch.), law.justia.com/cases/delaware/court-of-chancery/2010/143440-1.html. Direct quotation of the “Inc. has to mean at least that” passage. Chancellor Chandler's reasoning explicitly turns on the form-specificity of the for-profit Delaware corporation; the holding leaves space for stakeholder-as-ends balancing in a PBC, which would not face the same fiduciary objection. ↑
  31. 15 Pa. Cons. Stat. § 1715(a)–(b) (1990), current text at legis.state.pa.us — 15 Pa. Cons. Stat. ch. 17. The most permissive of the constituency statutes — Subsection (b) explicitly relieves directors of any duty to treat any constituency's interest as dominant or controlling, which is the operative break from the Revlon rationally-related-benefit qualifier. ↑
  32. Brett H. McDonnell, Corporate Constituency Statutes and Employee Governance, 30 Wm. Mitchell L. Rev. 1227, 1230–33 (2004), open.mitchellhamline.edu/wmlr/vol30/iss4/3; Anthony Bisconti, Note, The Double Bottom Line: Can Constituency Statutes Protect Socially Responsible Corporations Stuck in Revlon Land?, 42 Loy. L.A. L. Rev. 765, 768 & n.18 (2009) (updating count to thirty-three states), digitalcommons.lmu.edu/llr/vol42/iss3/5; see also Comm. on Corp. Laws, ABA Section of Bus. L., Other Constituencies Statutes: Potential for Confusion, 45 Bus. Law. 2253 (1990). Two academic surveys plus the ABA Committee on Corporate Laws's express recommendation against adoption. Delaware's deliberate non-adoption rests on the Delaware Bar Corporation Law Council's consistent position that the public benefit corporation form (8 Del. C. §§ 361–368, added in 2013) is the right vehicle for express stakeholder balancing. ↑
  33. Bebchuk & Tallarita, Will Corporations Deliver Value to All Stakeholders?, 75 Vand. L. Rev. 1031, 1077–82 (2022), SSRN 3899421. Follow-up audit examining acquisition agreements involving BRT signatories; finds no material change in the contractual treatment of stakeholders relative to pre-Statement baseline. Combined with the corporate-governance-guidelines finding of Illusory Promise footnote 26 above, this is the empirical record supporting Section 9's conclusion that the rhetorical commitment did not translate into governance practice. ↑
Note on citation form and source discipline

A note on citation form and source discipline

This page follows the SMU Corporate Governance Initiative's standing citation protocol: Bluebook 21st-edition format for every citation, with a short explanatory note appended to each footnote describing what the source contributes. Every cited authority — statute, case, journal article, book, and institutional statement — carries an active hyperlink to a primary or authoritative source: the issuing court (or a Justia / CourtListener mirror) for opinions, the state legislature's official compilation for statutes, the publisher's DOI or the institutional repository for journal articles, and the publishing institution for books and white papers. Practitioner blog commentary may appear in the prose as commentary but does not appear in this page as a primary citation target.

Three sources from the original page-package draft (Friedman Capitalism and Freedom, Berle The 20th Century Capitalist Revolution, the 1997 BRT Statement on Corporate Governance) are cited here without a primary publisher URL because the publisher's open-access page either does not exist or the page resolved to a paywall during preparation; the Cambridge URLs for Edmans, Mayer, and Bainbridge similarly resolve to the publisher catalogue page, which is the closest primary-source target available. The Wang & Migdal (HBS) and Deshpande / Dey / Serafeim (HBS) materials uploaded with this build, and the Grove / Clouse / Xu and KKS Advisors / TCP studies, were used as background context only and are not cited as primary doctrinal authority because each is a business-school case or applied study rather than a primary corporate-law source.

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