May 05, 2009
The Faith Perspective in Corporate Law: Top Down or Bottom Up?
Posted by Christine Hurt

Gordon left the door open for us regular Glommers to, as they say, glom on to the Religious Faith and Corporate Law symposium here.  I've found the posts very interesting so far and am happy for the chance to jump in here in our own backyard.

While a lot of questions remain unanswered as to what a religious perspective for corporate law would mean, I want to separate out some thoughts based on the divide between the corporate entity and the individual.  Much of religion focuses on the individual:  what the duties and obligations are for an individual in serving her faith; the relationship between the faithful person and God; and the relationship between the faithful person and God's other creations.  Here, we can use the lens of faith to remind us that individuals make decisions based on other considerations besides rational choice; homo economicus is not as one-dimensional as he might seem.  Many make decisions based on other principles, whether they ascribe those principles to a particular religion or philosophy or not.

However, much of the corporate social responsibility dialogue focuses on the corporation (or other business entity) as a super-individual.  One theory might be that the corporation as entity should reflect certain values and make choices based on certain principles, just as a collection of individuals should.  However, we live in a land of heterogenous principles.  One CEO might think that the corporation she controls should strive to bolster fair trade, even if the end results are less profits.  Another CEO might think the corporation she controls should use retained earnings to fight proposed legislation legalizing behaviors her religion tells her are immoral.  Sorting becomes difficult for like-minded shareholders.  Sorting based on profits was much easier!

A third perspective would be to analyze the capital market as a whole from a religious perspective.  Let's leave that for another time.

This week I heard of a unique combination of the first two perspectives.  I am always on the look out for good BA case histories, and heard the story of Stanley Tam and U.S. Plastic.  (Here is a video from the Generosity Book website about him.)  This may be an old story, but it's the first I've heard of it.  When Stanley began the company decades ago, he decided to "make God his senior partner."  He finally convinced an attorney he was serious, and so he transferred 51% of the corporation to a religious foundation.  Therefore, 51% of the profits went to the foundation each year.  Literally tens of millions of dollars were used in this way.  A decade or so go by, and Stanley feels God urging him to become an employee of God.  So, he transfers the remaining 49% of the profits to the foundation, and he took only a modest salary.  The foundation has an old-line mission:  converting souls around the world to Christianity.  Anyway, according to the website,  U.S. Plastic does not seem like a tiny operation.

Of course, U.S. Plastic is not a publicly-held corporation and in fact seems to have only had two shareholders, Stanley and the foundation, in its history.  As an investor, would you purchase shares (publicly-held or privately-held) in a corporation owned 51% by a charitable foundation?  Would the purpose of the foundation matter to you?  Would you feel differently owing publicly-traded shares in a corporation owned 51% by a charitable foundation with values you disagreed with than owing shares in a company owned 51% by a person you disagreed with?  If the return on your investment were good, would you care either way?

I saw a writer describe Stanley Tam as a "Christian entrepreneur."  What is a Christian entrepreneur?

Forum: Faith | Bookmark

TrackBacks (0)

TrackBack URL for this entry:

Links to weblogs that reference The Faith Perspective in Corporate Law: Top Down or Bottom Up?:

Recent Comments
Popular Threads
Search The Glom
The Glom on Twitter
Archives by Topic
Archives by Date
January 2019
Sun Mon Tue Wed Thu Fri Sat
    1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31    
Miscellaneous Links