Business Persons: A Legal Theory of the Firm - Hardcover

Orts, Eric W.

9780199670918: Business Persons: A Legal Theory of the Firm

Hardcover

ISBN 10: 0199670919 ISBN 13: 9780199670918

Publisher: OUP Oxford, 2013

Business firms are ubiquitous in modern society, but an appreciation of how they are formed and for what purposes requires an understanding of their legal foundations. This book provides a scholarly and yet accessible introduction to the legal framework of modern business enterprises.

It explains the legal ideas that allow for the recognition of firms as organizational "persons" having social rights and responsibilities. Other foundational ideas include an overview of how the laws of agency, contracts, and property fit together to compose the organized "persons" known as business firms. The institutional legal theory of the firm developed embraces both a "bottom-up" perspective of business participants and a "top-down" rule-setting perspective of government.

Other chapters in the book discuss the features of limited liability and the boundaries of firms. A typology of different kinds of firms is presented ranging from entrepreneurial one-person start-ups to complex corporations, as well as new forms of hybrid social enterprises. Practical applications include contribution to the debates surrounding corporate executive compensation and political free-speech rights of corporations.

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Review:

Whereas recent decades of scholarship on the nature of the firm have stressed economic and finance theory, Orts frames the analysis as centrally about law and legal theory. The book employs an ethics-focused, multi-perspective approach and draws extensive parallels to the history and philosophy of law. It re-elevates the once-prominent roles of agency, contract, and property law and theory in asking and answering many of the classic questions about the firm [and] includes important insights into the modern taxonomy of firms and their shifting boundaries, as well as practical contributions to current policy debate ... Orts has been one of the leading voices advocating a more nuanced view of the firm, and he now delivers a thoroughly researched and foundational new book that is a must read for anyone thinking seriously about the theory of the modern firm. (Frank Partnoy, George E. Barrett Professor of Law and Finance, University of San Diego School of Law)

In this comprehensive study, Eric Orts takes on the economists and shows why law is essential to our understanding of the business firm. Anyone who cares about the future of business should be grateful for this addition to the literature. (Lynn Sharp Paine, John G. McLean Professor of Business Administration, Harvard Business School)

This book is a path-breaking analysis of the business firm from a legal perspective. As shown by the debate surrounding the Supreme Court's Citizens United decision, the question of corporate legal personality has resurfaced as one of the key legal and political issues of our time. Prof. Orts' book is indispensable reading for anyone interested in exploring the extent to which "corporations are people too." (Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law, University of Michigan Law School)

About the Author:

Eric W. Orts is the Guardsmark Professor of Legal Studies and Business Ethics at the Wharton School of the University of Pennsylvania with a secondary appointment in Management. He is the faculty director of the Initiative for Global Environmental Leadership and a co-faculty director of the FINRA Institute at Wharton. He has been a visiting professor at the University of Leuven, the University of Michigan Law School, NYU School of Law, Tsinghua University School of Economics and Management, the University of Sydney Law School, and UCLA School of Law. His research focuses on business theory, corporate law, ethics, and sustainability.

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