Meinhard V. Salmon and the Economics of Honor

Posted: 14 Feb 1999

See all articles by Nicholas L. Georgakopoulos

Nicholas L. Georgakopoulos

Indiana University - Robert H. McKinney School of Law

Multiple version iconThere are 2 versions of this paper

Abstract

The classic corporate law case Meinhard v. Salmon is a gem of rhetoric and morality. This article argues that under its polished surface lies one more Cardozo opinion with superb economic ramifications. The broad fiduciary obligations that Cardozo champions have numerous benefits: (i) They allow the financing of projects that create primarily remote value, (ii) they mitigate managerial risk-aversion, (iii) they further the social desirability of financing decisions, and (iv) they induce desirable managerial incentives. Meinhard is a crucial step in the transition to the modern form of impersonal managerial capitalism. Contains a formal appendix and pictures of the site before and after the project involved in the litigation.

JEL Classification: K2, L2

Suggested Citation

Georgakopoulos, Nicholas L., Meinhard V. Salmon and the Economics of Honor. Available at SSRN: https://ssrn.com/abstract=141352

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