Study Throws Wet Blanket On Other Constituency Statutes

An "other constituency statute" permit, but do not require, boards of directors to consider non-shareholder interests (such as the interests of employees, the environment, et cetera) when making decisions.  California and Delaware are among a handful of states that have not enacted an other constituency statute.  Their decision to eschew such legislation appears to have been a wise one, at least according to one recently released study.  

In The Cost (and Unbenefit) of Conscious Capitalism,  the authors examined a sample of U.S. publicly traded firms spanning nearly three decades.  Their conclusions are not good news for advocates of other constituency statutes and stakeholder capitalism: