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Abstract

American “populism” has had a major impact on the development of U.S. corporate governance throughout its history. Specifically, appeals to the perceived interests of average working people have exerted enormous social and political influence over prevailing conceptions of corporate purpose—that is, the aims toward which society expects corporate decision-making to be directed. In this Article, I assess the impact of American populism upon prevailing conceptions of corporate purpose, contrasting its unique expression in the context of financial firms with that arising in other contexts. I then examine its impact upon corporate governance reforms enacted in the wake of the financial and economic crisis that emerged in 2007. In Part II, I explore how populism has historically shaped conceptions of corporate purpose in the United States.In Part III, I turn to the crisis, arguing that growing shareholder centrism over recent decades goes a long way toward explaining excessive risk-taking in financial firms—a conclusion rendering post-crisis reforms aimed at further strengthening shareholders a surprising and alarming development. I conclude in Part IV that the potential corporate governance reforms most worthy of consideration include those aimed at accomplishing precisely the opposite: insulating financial-firm management from equity-market pressures and associated risk incentives.