The Story of Pinocchio: Now I'm a Real Boy

Abstract

Corporate responsibility has become a matter of great concern after the Enron and WorldCom scandals rocked corporate culture. This Article suggests that corporate irresponsibility stems from the failure of corporations to address the concerns of non- shareholders and the failure of shareholders and regulatory watchdogs to look beneath the corporate surface. Competing schools of thought, such as neoclassical economics, progressive corporate theory, and outsider corporate theory, offer divergent analyses of the corporate responsibility dilemma. Regulatory responses to the crisis of corporate conscience remain untested. This Article suggests that our failure to foresee corporate irresponsibility partly comes from over on traditional theories of shareholder primacy. Change is unlikely to come from within the corporation, so regulators must look beyond the board of directors to ensure responsible management. This Article proposes criminal liability for corporate indifference to the health and well-being of foreseeable victims of corporate irresponsibility. Prove yourself brave, truthful, and unselfish, and someday you will be a real boy. —PINOCCHIO (Walt Disney Studios 1940)