Problem: The business judgment rule supplies significant protection to directors and officers whose decisions may be challenged by shareholder lawsuits. The theory is simple: judges are not experts in particular businesses and therefore should not substitute their judgments for the true experts, i.e., the directors and officers of the businesses. However, the business judgment rule can allow directors and officers to shield themselves from liability from what really may be self-serving or even negligent decisions. What's the best balance, and does that balance exist today in the way the rule is applied, are questions you'll examine in this assignment.
Explain the business judgment rule and whether you would modify it. Do you think it gives too much protection to directors and officers, and why?