Lynn Stout

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Lynn Stout
by Heather Ainsworth

Lynn A. Stout is the Distinguished Professor of Corporate & Business Law at the Cornell Law School. She specializes in researching, writing on, and teaching about corporate law, securities and derivatives regulation, law and economics, and prosocial behavior and law.

Career

Stout holds a B.A. summa cum laude from Princeton University as well as a Master's in Public Policy from Princeton's Woodrow Wilson School and a J.D. from the Yale Law School. Until 2012 she was the Paul Hastings Professor of Corporate and Securities Law at the University of California, Los Angeles School of Law, after which she joined the Cornell Law School.[1] She has also taught at George Washington Law School, New York University Law School, Harvard Law School, and Georgetown University, and has served as a Guest Scholar at the Brookings Institution. She has served as an Independent Trustee of the Eaton Vance Mutual Funds since 1998 and on the Advisory Board of the Aspen Institute's Business and Society Program since 2009. Starting in 2014 Stout also serves on the U.S. Treasury Department's Financial Research Advisory Committee[2] and on the Board of Governors of the CFA Institute.[3] She was also named one of the 100 Most Influential People In Business Ethics in 2014 by the Ethisphere Institute.[4]

In 2012, Stout elected to leave the UCLA faculty and joined Cornell Law School after UCLA accepted a $10 million donation from Lowell Milken to create a "Lowell Milken Business Law and Policy Institute."[5] Stout expressed ethical concerns about UCLA's decision to name a business law center after Lowell Milken in light of the fact that Lowell Milken had been banned from the securities industry and barred from the New York Stock Exchange.[6]

Notable Theories

The importance of human conscience to peace, prosperity, and the rule of law

Stout is one of the first to apply the scientific evidence on unselfish prosocial behavior (“conscience”) to our understanding of how legal rules shape behavior.[7] Cultivating Conscience: How Good Laws Make Good People (Princeton University Press, 2011) critiques the “homo economicus” assumption of rational selfishness and surveys behavioral science evidence demonstrating how and when people sacrifice their own material welfare to help or to avoid harming others. It applies the lessons of behavioral science to the questions of how tort, contract, and criminal law rules shape behavior, and suggests how to use law and rules more effectively by recruiting the force of conscience, not just material incentives, to encourage cooperative, ethical, and law-abiding behavior. Stout has also published articles on the importance of unselfish prosocial behavior in analyzing judicial behavior, corporate boards, and corporate and securities law.[8]

Team Production Theory and other Challenges to “Shareholder Primacy”

With her co-author economist Margaret Blair, Stout has proposed a “team production” theory of the corporation that posits that corporate boards enjoy a broad range of discretion in setting corporate policy and allocating corporate surplus because they are in the best position to preserve and protect important firm-specific investments of not only shareholders, but also creditors, employees, and the larger community.[9] Stout’s and Blair’s team production model was cited by U.S. Supreme Court Justice Stevens in his dissenting opinion in Citizens United v. FEC.[10] This article is also among the most cited Corporate and Securities Law law review articles of all time.[11]

Stout has also published numerous other articles on the empirical and theoretical weakness in the “shareholder primacy” view that corporations should be run to maximize shareholder wealth as measured by share price.[12] Her most recent book, The Shareholder Value Myth: How Putting Corporations First Harms Investors, Corporations, and the Public, addressed the hazards of pursuing shareholder value.[13] The Media Consortium named this book "one of the five most impactful stories in 2012"[14] and it was named by Directors & Boards Magazine as the 2012 Governance Book of the Year.[15]

Publications

Selected books

  • The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public (Berrett-Koehler Publishers, 2012).
  • Cultivating Conscience: How Good Laws Make Good People (Princeton University Press, 2011)
  • Cases and Materials on Law and Economics (with David Barnes, West 1992)

Selected scholarly publications

  • The Corporation as Time Machine: Intergenerational Equity, Intergenerational Efficiency, and the Corporate Form, 38 Seattle U. L Rev. 685 (2015)
  • Killing Conscience: The Unintended Behavioral Consequences of Pay-For-Performance, 39 J. Corp. L. 525 (2014)
  • The Toxic Side Effects of Shareholder Primacy, 161 U. Pa. L. Rev. 2003 (2013)
  • Optimism, Uncertainty, and the Problem of Democratic Regulation of Speculation, 97 Cornell L. Rev. 1177 (2012)
  • The Legal Origin of the 2008 Credit Crisis, 1 Harvard Bus. L. Rev. 1 (2011)
  • Fiduciary Duties for Activist Shareholders , 60 Stan. L. Rev. 1255 (2008)(with Iman Anabtawi)
  • The Mechanisms of Market Inefficiency: An Introduction to the New Finance, 28 J. Corp. L. 635 (2003)
  • A Team Production Theory of Corporate Law, 85 Va. L. Rev. 247 (1999) (with Margaret Blair)
  • Are Stock Markets Costly Casinos? Disagreement, Market Failure, and Securities Regulation, 81 Va. L. Rev. 611 (1995)

See also

Notes

  1. ↑ http://www.lawschool.cornell.edu/faculty/bio.cfm?id=495
  2. ↑ http://financialresearch.gov/press-releases/2014/07/14/ofr-announces-new-members-of-its-financial-research-advisory-committee/
  3. ↑ http://www.cfainstitute.org/about/governance/leadership/Pages/current_board.aspx
  4. ↑ http://ethisphere.com/magazine/100-most-influential-in-business/
  5. ↑ “Milken’s Gift Stirs Dispute at U.C.L.A. Law School,” N. Y. Times, Dealbook blog (Aug. 22, 2011).
  6. ↑ “UCLA law professor opposes naming institute after Lowell Milken,” Los Angeles Times (Aug. 24, 2011).
  7. ↑ “Law Can Play a Critical Role in Cultivating Conscience,” Vanderbilt Law School (Feb. 3, 2011); Molly Wilson, “Some Thoughts on Lynn Stout’s ‘Cultivating Conscience,’” PrawfsBlawg (Jan. 31, 2012).
  8. ↑ Judges As Altruistic Hierarchs, 43 Wm. & Mary L. Rev. 1605 (2002) (2001 George Wythe Lecture); On The Proper Motives of Corporate Directors (Or, Why You Don't Want to Invite Homo Economicus to Join Your Board), 28 Del. J. Corp. L. 1 (2003) (17th Annual Francis G. Pileggi Distinguished Lecture in Law); In Praise of Procedure: An Economic and Behavioral Defense of Van Gorkom and the Business Judgment Rule, 96 Nw. U. L. Rev. 765 (2002); Trust, Trustworthiness, and the Behavioral Foundations of Corporate Law, 149 U. Penn. L. Rev. 1735 (2001) (with Margaret Blair); The Investor Confidence Game, 68 Brooklyn L. Rev. 407 (2002) (Ninth Annual Abraham L. Pomerantz Lecture)
  9. ↑ A Team Production Theory of Corporate Law, 85 Va. L. Rev. 247 (1999) (with Margaret Blair). See also "Clinton Global Initiative: Can Companies Be Good and Do Well?" Time Business (Sep. 25, 2012); Working Capital: Creating Value for Business and Society, 2012 CGI Annual Meeting.
  10. ↑ Citizens United v. Federal Election Commission, 558 U.S. ___, 130 S. Ct. 876 (2010) (Stevens, J., dissenting)
  11. ↑ Fred R. Shapiro & Michelle Pearse, "The Most-Cited Law Review Articles of All Time," 110 Mich. L. Rev. 1483 (2012).
  12. ↑ See, e.g., ‘Maximizing shareholder value’ is ill-conceived concept, Los Angeles Times, Sep. 2, 2012; Why We Should Stop Teaching Dodge v. Ford, 3 Va. L. & Bus. Rev. 163 (2008); The Mythical Benefits of Shareholder Control, 93 Va. L. Rev. 789 (2007); with Specific Investment: Explaining Anomalies in Corporate Law, 31 J. Corp. L. 719 (2006) (with Margaret Blair); Bad and Not-So-Bad Arguments for Shareholder Primacy, 75 S. Cal. L. Rev. 1189 (2002).
  13. ↑ See Steve Denning, "Is the Tyranny of Shareholder Value Finally Ending?", Forbes (Aug. 29, 2012); Joe Nocera, "Down with Shareholder Value", The New York Times (Aug. 10, 2012); Jesse Eisinger, "Challenging the Long-Held Belief in 'Shareholder Value'", N. Y. Times, Dealbook blog (Jun. 27, 2012).
  14. ↑ Berrett-Koehler Book Chosen as One of Five Most Impactful Stories in 2012 by The Media Consortium, Berrett-Koehler Publishers, Feb. 7, 2013.
  15. ↑ http://www.sodali.com/attachments/A.0085.pdf

External links

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