Document Type
Essay
Publication Title
Iowa Law Review
Publication Date
2025
Abstract
Since the late 1970s, corporate governance law has incorporated a growing number of mandates that require corporate boards to explain to their shareholders the reasons behind their decision-making. These mandates do more than merely require boards to disclose certain decisions. They compel boards to publicly state why they have made a particular choice.
Public reason-giving is a core democratic value that recognizes the accountability of a representative body to its constituents. It provides a basis for constituents to assess the quality of leaders’ decision-making and to engage with that decision-making in effective ways. In corporations, public reason-giving facilitates the shareholder’s exercise of the vote; it also provides key tools for shareholders to contest decisions with which they disagree, while encouraging boards to employ care and deliberation around controversial issues that are likely to generate dissent among stakeholders.
This Essay describes the trend in favor of public reason-giving and situates it in relation to the “democratic turn” in public company governance. It also assesses the merits of the trend. The Essay argues that public reason-giving mandates have the potential to move boards beyond superficial or politically motivated decision-making to reach reasoned decisions that will hold up under scrutiny and contestation. Mandatory public reason-giving can be useful for mitigating polarization and thus could play a constructive role in board decision-making related to climate risk. Indeed, the SEC’s climate risk disclosure rule included some reason-giving requirements, and investors demanded more reason-giving than the final rule prescribed. The Essay concludes that regulators should continue to experiment with reason-giving mandates, and investors should continue asking for them and, if possible, use private ordering to get them.
Recommended Citation
Sarah C. Haan, Mandatory Public Reason-Giving in Corporate Governance, 110 Iowa L. Rev. 2073 (2025).