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The Kasky-Nike Threat to Corporate Social Reporting: Implementing a Standard of Optimal Truthful Disclosure as a Solution

Published online by Cambridge University Press:  23 January 2015

David Hess  and
Thomas W. Dunfee
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Abstract:

In the recent case of Nike v. Kasky both sides argued that their standard for distinguishing commercial speech from political speech would create the better policy for ensuring accurate and complete disclosure of social information by corporations. Using insights from information economics, we argue that neither standard will achieve the policy goal of optimal truthful disclosure. Instead, we argue that the appropriate standard is one of optimal truthful disclosure—balancing the value of speech against the costs of misinformation. Specifically, we argue that an SEC-sanctioned safe harbor available under a closely supervised system for social reporting will bring about optimal truthful disclosure. The scheme is intended to enhance stakeholder confidence in corporate social and political commentary, while at the same time encouraging corporations to provide accurate information in a fair playing field of public debate.

Type
Special Section on Commercial Speech
Information
Business Ethics Quarterly , Volume 17 , Issue 1 , January 2007 , pp. 5 - 32
Copyright
Copyright © Business Ethics Quarterly 2007

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