Washington and Lee Law professor Sarah Haan recently published in The CLS Blue Sky Blog, the Columbia Law School blog on corporations and capital markets. Haan co-authored the April 10 post, “Boards in Information Governance,” with Professor Faith Stevelman of New York Law School.
The blog contribution previews Haan and Stevelman’s forthcoming University of Pennsylvania Journal of Business Law article of the same title. The authors argue that the prevailing concepts of corporate governance — agency-cost theory and “monitoring board” models — are of limited utility and effectiveness in the 21st century business environment. Particularly considering the current COVID-19 pandemic and emerging financial turmoil, they posit that the future of board governance lies in the strategic management and authoritative deployment of information:
[A]s firms are scrambling to email customers and revise employment policies, the global pandemic and stock market crash are accelerating this information and communications-based evolution in corporate governance.
To weather the pandemic and crash, boards of directors will need to engage fully with top management to marshal their firms’ human and capital resources and direct them to their highest and best use. Firms that took their stakeholder and risk management obligations seriously, and boards that fully embraced the lessons of Caremark, are the ones poised to make the strongest recovery. They will have built the necessary infrastructure and followed best practices for deliberation and communication.
Sarah Haan is an Associate Professor of Law at W&L, where her teaching and research focus on on Business Associations, Corporate Governance, Corporate Disclosure, First Amendment, and Corporate Political Speech. Haan was previously on the faculty of the University of Idaho College of Law and worked in the litigation department at Davis Polk & Wardwell in New York. You can follow her on Twitter: @shaan_haan.