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from Part II - Governance and Entrepreneurial Action
Published online by Cambridge University Press: 07 April 2022
The business judgment rule can be justified on multiple grounds, ranging from concerns with hindsight bias, to doubts about judicial expertise, to worries about excessive director caution (and this is an incomplete list). We can also understand this rule as a mechanism to facilitate entrepreneurial action. In part, this is a product of the normal operation of the rule, with its high level of judicial deference. It is also a consequence of the rule’s limited exceptions, and the courts’ reluctance in adding new ones. I will focus in particular on the rejection of external benchmarks for measuring the reasonableness of a business judgment.
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