Organizational Incentives to Care About the Law

Law and Contemporary Problems, Vol. 60, No. 3, Autumn 1997 [Published: December 1998]

Posted: 26 Jan 1999

Abstract

This article examines the relationships among legal norms of corporate governance, agency doctrine, and the propensity of organizations to obey or disregard the law. In particular, the article examines the vicarious liability of corporations for criminal acts committed by employees and other agents and the incentives that vicarious liability creates, as well as the extent to which a corporation's directors have responsibility to exercise control over the conduct of the corporation's agents. A concrete focal point for much of the analysis is the very significant 1996 opinion, In re Caremark International Inc., in which Delaware's Court of Chancery explicitly imposed on corporate directors a duty to monitor other actors situated deeper within the organization. The article argues that the content of directors' duty to monitor should encompass an assessment of the incentives that the corporation itself creates for its agents. It concludes with as assessment of the impact of the business judgment rule in light of the duty to monitor.

Note: This is a description of the article and not the actual abstract.

JEL Classification: G31, G32, G34

Suggested Citation

DeMott, Deborah, Organizational Incentives to Care About the Law. Law and Contemporary Problems, Vol. 60, No. 3, Autumn 1997 [Published: December 1998], Available at SSRN: https://ssrn.com/abstract=146744

Deborah DeMott (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7082 (Phone)
919-613-7231 (Fax)

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