CSR and Corporate Law : The Case for Preferring Procedural Rules

Every conception of the Corporate Social Responsibility and of the optimal relationship between the interests of the shareholders and those of the other stakeholders implies and suggests a specific solution to the problem of limiting and controlling the discretionary power of managers. Stemming from this premise, the paper critically analyses three conceptions of CSR - the theory of the shareholder value, the long-term coincidence approach and the team production theory. We interpret these theories as three different conceptions of the relationship between the interests of shareholders and other stakeholders, and we evaluate them in terms of the model of corporate governance that they propose and in terms of their ability to reach the equilibrium of the interests of shareholders and stakeholders that they describe as optimal. We conclude that none of the three theories accomplishes its goal, and more precisely none of them is able to provide manageable criteria to control the discretionary power of managers. We maintain that in contexts where there is great difficulty in defining the criteria to guide the managers' decisions, it is better to shift the attention from the substance to the procedure, and we propose two rules of best practice that in our view could improve the quality of managerial decisions in CSR matters