ORCID
Document Type
Article
Publication Date
8-11-2022
Abstract
Should corporate legal risk be treated similarly to corporate business risks? Currently, the law draws a clear-cut distinction between the two sources of risk, permitting the latter type of risk and banning the former. As a result, fiduciaries are shielded from personal liability in the case of business risk and are entirely exposed to civil and criminal liability that arises from legal risk-taking. As corporate law theorists have underscored, the differential treatment of business and legal risk is highly problematic from the perspective of firms and shareholders. To begin with, legal risk cannot be completely averted or eliminated. More importantly, decisions involving negligible levels of legal risk might yield significant profits for firms. Thus, the outright ban on legal risk-taking harms shareholders, who would have favored a more nuanced regime to legal risk.
Keywords
Corporate Governance, Compliance, Business Judgement Rule, Legal Risk, Business Risk
Publication Title
Boston University Law Review
Repository Citation
102 B.U. L. Rev. 1601 (2022).
Included in
Business Administration, Management, and Operations Commons, Business Law, Public Responsibility, and Ethics Commons, Business Organizations Law Commons, Corporate Finance Commons, Finance and Financial Management Commons, Law and Economics Commons