CHAPTER 2 How Shareholder Primacy Gets Corporate Law Wrong One of the most striking symptoms of how shareholder- primacy thinking has infected modern discussions of cor- porations is the way it has become routine for journalists, economists, and business observers to claim as undisputed fact that U.S. law legally obligates the directors of corpora- tions to maximize shareholder wealth. Business reporters blithely assert that "the law states that the duty of a busi- ness's directors is to maximize profits for shareholders." 28 Similarly, the editor of Business Ethics states that "courts continue to insist that maximizing returns to shareholders is the sole aim of the corporation. And directors who fail to do so can be sued." 29 The widespread perception that corporate directors and executives have a legal duty to maximize shareholder wealth plays a large role in explaining how shareholder value think- ing has become so endemic in the business world today. After all, if directors and executives can be held personally liable for failing to maximize shareholder wealth, one can hardly fault them for trying to raise the company's share price by taking on massive debt, laying off employees, or spending less on re- search and development. Radicals and reformers can debate whether shareholder wealth maximization is good for society 24