The Central Role of Myth in Corporate Law

Leeds-Mannheim Online Seminar Series in Business Law 2022

Together with the Department of Law, University of Mannheim, the Centre for Business Law and Practice (University of Leeds) continues in 2022 the Leeds/Mannheim Online Seminar Series, which was launched last year. This seminar is the last of four that will take place in May, June and July 2022.


This Article shows that a variety of fundamental rules of corporate law are based on a set of myths. The Article explains that these myths play an important role in attracting public acceptance and support for what otherwise would be unpopular and controversial regulations. Thus, one can view the role played by myth in corporate law in a particular context as having either positive or negative social effects depending on one’s opinion of the social value of the underlying legal rule that being buttressed and affirmed by the myth. Four political and sociological myths that continue to play important roles in law are examined. These are: (1) the myth that corporations are owned by their shareholders and represent ownership interests in businesses rather than mere financial claims on the cash flows of those businesses, coupled with certain political (voting) rights that protect those claims; (2) the “shareholder value myth,” that corporate officers and directors are legally required to maximize firm value; (3) that subsidiary companies are independent from and not subject to the control of their parent companies and must remain so in order for the parent company to avoid liability for the contract and tort debts of the subsidiary under various alter ego and piercing the corporate veil theories of corporate law; and (4) the legal regulation of insider trading is justified because of the necessity of creating a “level playing field” among participants in financial markets. Reasonable people can disagree about whether the role played by these myths is normatively positive or negative in each of these contexts.


Jonathan R. Macey is Sam Harris Professor of Corporate Law, Corporate Finance, and Securities Law at Yale University and Professor in the Yale School of Management. From 1991 – 2004, Professor Macey was J. DuPratt White Professor of Law, Director of the John M. Olin Program in Law and Economics at Cornell Law School, and Professor of Law and Business at the Cornell University Johnson Graduate School of Business. Professor Macey earned his B.A. cum laude from Harvard in 1977, and his J.D. from Yale Law School in 1982, where he was Article and Book Review editor of The Yale Law Journal. In 1996, Professor Macey received a Ph.D. honoris causa from the Stockholm School of Economics. Following law school, Professor Macey was law clerk to Judge Henry J. Friendly on the U.S. Court of Appeals for the Second Circuit. Professor Macey is the author of several books including the two-volume treatise, Macey on Corporation Laws, published in 1998 (Aspen Law & Business), and co-author of two leading casebooks, Corporations: Including Partnerships and Limited Liability Companies (2003 Thomson West), which is in its eighth edition, and Banking Law and Regulation (2002 Aspen Law & Business), which is now in its third edition. He also is the author of over 100 scholarly articles. His recent articles have appeared in the Banking Law Journal, the University of Chicago Law Review, the Stanford Law Review, The Yale Law Journal, the Cornell Law Review, the Journal of Law and Economics, and the Brookings Wharton Papers on Financial Institutions. He has published numerous editorials in such publications as The Wall Street Journal, Forbes, The Los Angeles Times, and The National Law Journal.

Moderator: Dr Suren Gomtsian (University of Leeds)

This one-hour event will take place via Zoom and will be recorded. Registration for this event will be understood as indicating consent to the talk being recorded.

All welcome. This is a free event, though registration is required via Eventbrite.