When corporations engage in misconduct, we rely on two types of sanctions to discipline them: legal and reputational. For various reasons, both types of sanctions have limitations. This chapter argues that a combination of legal and reputational sanctions for corporate misconduct can help to improve the effectiveness of blame attribution, deliver meaningful punishment for misconduct, and foster organizational change. For example, legal sanctions through lawsuits and government fines can trigger reputational sanctions that can unleash a subsequent wave of monetary costs because the publicity associated with the lawsuit or government fine can lead a corporation’s stakeholders to re-evaluate their relationship with it. Alternatively, legal rules can facilitate the operation of reputational markets by increasing information flows and thereby improving attribution of conduct to particular companies.

Reputation matters. Companies invest vast resources in building and maintaining a good reputation. And the threat of losing reputation once bad news about the company breaks disciplines corporate behavior to begin with. Companies anticipate that the release of damning information about them may raise the costs of financing, because investors and lenders now realize that the company has poorer internal controls than they had previously thought. Or it may raise the operational costs of the company, because consumers, suppliers, and employees now perceive the company’s operational culture to be more opportunistic than they had initially assumed.

Chapter 5 is focused on the risk of capture of international courts by NGOs. The chapter reviews the advantages and disadvantages of NGO involvement in international courts' proceedings either as direct applicants, through filing amicus curiae briefs, or informally. Different procedures are recommended for different international courts depending on their circumstances. The second part of the chapter is focused on the reputational sanctions NGOs can create after an international court issues its judgment. Drawing on quantitative and qualitative empirical research I conducted and on insights from Social Network Analysis, the chapter argues that international courts can create conditions in which NGOs process shaming information accurately.