HEC Research Papers Series,
HEC Paris

Abstract: "At the heart of every firm’s creation, life, and dissolution resides the nature of its governance. Environmental, social, and technological challenges question modern capitalism. What we observe today is an epistemic rupture. This is not simply a new pendulum’s swing in the history of shareholder-management relationships as it has been the case since the 1930s. In reality, we observe a new world emerging that requires adaptation in both corporate governance and competition game. As believers in the union of law, economics, and management disciplines to think anew firm governance, we unite and compose a manifesto to determine who is legitimate to set the principles and purpose pursuant to which firms will be run, how firms will best arbitrate between multiple trade-offs, how they will report their performance, and in which regulatory competition environment they will complete. We define three pillars (shareholder duacy, firm success, and fair value shaing) and deduce five principles for a renewed corporate governance of the XXIst century firm which aim to achieve a fruitful deliberation process among the three governing bodies: 1] Shareholders set a purpose-based course, Board of Directors follow and implement it, 2] A trustful relationship linking board of directors and management, 3] New sharing rules between a firm and its stakeholders, 4] Redefining total value generation and performance, and 5] A new workable approach to competition."

Keywords: shareholder duacy; purpose; fair sharing; governance

JEL-codes: K00; L00

13 pages, August 2, 2021

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