Shareholder Primacy As An Untenable Corporate Norm PDF Download
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| Author | : Yong-Shik Lee |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2023-11-15 |
| Genre | : |
| ISBN | : 9781638282884 |
Download Shareholder Primacy as an Untenable Corporate Norm Book in PDF, ePub and Kindle
Shareholder Primacy as an Untenable Corporate Norm argues that corporate interests and broader social interests, such as benefits to consumers and employees, are not mutually exclusive and can be reconciled by allowing corporate managers and majority shareholders to define corporate interests more broadly.
| Author | : N. Craig Smith |
| Publisher | : |
| Total Pages | : 44 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Shareholder Primacy, Corporate Social Responsibility, and the Role of Business Schools Book in PDF, ePub and Kindle
This paper examines the Shareholder Primacy Norm (SPN) as a widely acknowledged impediment to corporate social responsibility and explores the role of business schools in promoting the SPN but also potentially as an avenue for change by addressing misconceptions about shareholder primacy and the purpose of business. We start by explaining the SPN and then review its status under US and UK law and show that it is not a legal requirement, at least under the guise of shareholder value maximization. This is in contrast to the common assertion that managers are legally constrained from addressing CSR issues if doing so would be inconsistent with the economic interests of shareholders. Nonetheless, while the SPN might be muted as a legal norm, we show that it is certainly evident as a social norm among managers and in business schools -- reflective, in part, of the sole voting rights of shareholders on corporate boards and of the dominance of shareholder theory -- and justifiably so in the view of many managers and business academics. We argue that this view is misguided, not least when associated with claims of a purported legally enforceable requirement to maximize shareholder value. We propose two ways by which the influence of the SPN among managers might be attenuated: extending fiduciary duties of executives to non-shareholder stakeholders and changes in business school teaching such that it covers a plurality of conceptions of the purpose of the corporation.
| Author | : Swati Lohia |
| Publisher | : |
| Total Pages | : 60 |
| Release | : 2007 |
| Genre | : Corporate governance |
| ISBN | : |
Download The Shareholder Primacy Norm and Sleight of Hand Book in PDF, ePub and Kindle
| Author | : David Rönnegard |
| Publisher | : |
| Total Pages | : |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download Shareholder Primacy Vs. Stakeholder Theory Book in PDF, ePub and Kindle
| Author | : Jill E. Fisch |
| Publisher | : |
| Total Pages | : 39 |
| Release | : 2005 |
| Genre | : |
| ISBN | : |
Download The Role of Shareholder Primacy in Institutional Choice Book in PDF, ePub and Kindle
An extensive body of empirical research evaluates corporate law in terms of its effect on shareholder wealth and, based on this effect, makes efficiency claims designed to influence regulatory policy. Central to these claims is the premise that the principal objective of the corporation is the maximization of shareholder wealth. By defining regulatory efficiency in terms of shareholder wealth, the literature relies on the shareholder primacy norm to equate shareholder value with firm value.This Article challenges both the positive and the normative foundations of the shareholder primacy norm. The Article demonstrates that existing legal doctrine does not require corporations to maximize shareholder wealth at the expense of other stakeholder interests. Although economic analysis offers a theoretical defense of shareholder primacy, its conclusions are based on strong and questionable assumptions about the market conditions in which the corporation operates. Finally, the Article explores and rejects the argument that shareholder primacy may be grounded in existing limits on management fiduciary duties, offering an alternative defense of those limits in terms of comparative institutional analysis.Justifying the evaluation of corporate performance in terms of shareholder wealth is critical to empirical claims of regulatory efficiency. The presence of other stakeholders, whose interests in the firm may be not reflected in an assessment of shareholder value, raises questions about efficiency analyses that do not incorporate those interests into their assessment of firm value. Alternative conceptions of firm value suggest that empirical scholars need to offer better and explicit justifications for their reliance on shareholder wealth and, more importantly, for their argument that shareholder wealth effects should dominate regulatory policy.
| Author | : David Ronnegard |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2013 |
| Genre | : |
| ISBN | : |
Download Corporate Social Responsibility and the Legitimacy of the Shareholder Primacy Norm Book in PDF, ePub and Kindle
Shareholder primacy is considered a major impediment to corporate social responsibility. This paper examines the status of the Shareholder Primacy Norm under US and UK law and shows that it is no longer legally enforceable, but remains a powerful social norm among managers, in part because of the sole voting rights of shareholders. Accordingly, we apply Rawls' social contract theory to evaluate the legitimacy of shareholder primacy as manifest through the voting rights of shareholders and assess whether this principle of governance would be endorsed or the Stakeholder Equality Norm, a competing norm proposed here as an operationalization of stakeholder theory. Contrary to expectations, we find that a Rawlsian analysis is more supportive of shareholder primacy than stakeholder theory because it dictates that economic efficiency would determine the best governance principle and shareholder primacy would likely be more efficient. However, shareholder primacy would not be unfettered because justice considerations of Rawls' theory impose exogenous constraints, primarily in the form of legislation. We conclude by showing that the on-going debate between shareholder primacy and stakeholder theory is in many respects about the choice between exogenous vs. endogenous constraints and essentially a debate between political liberalism and libertarianism.
| Author | : Robert J. Rhee |
| Publisher | : |
| Total Pages | : 59 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
Download A Legal Theory of Shareholder Primacy Book in PDF, ePub and Kindle
Shareholder primacy is the most fundamental concept in corporate law and corporate governance. It is widely embraced in the business, legal, and academic communities. Economic analysis and policy arguments advance a normative theory that corporate managers should maximize shareholder wealth. Academic literature invariably describes shareholder primacy as a “norm.” But whether the concept is “law” is contested because, remarkably, we still do not have a coherent legal theory. Our understanding of a fundamental tenet of the field is flawed and incomplete. This article presents a positive legal theory of shareholder primacy. It answers the questions: Is shareholder primacy law? What form of law is it? How does it work? The core prescription to maximize profit is misunderstood as a social norm because it cannot be in the form of an enforceable rule, the framework of a board's fiduciary duty. Such form of law would be internally incoherent with the structure of corporate law. However, to influence behavior the concept of law is not limited to a rule-sanction form. Pervasive judicial acceptance of a principle can legitimate a rule and thus impose a strong internal sense of obligation. This article conducts the first empirical study of case law discussing profit maximization for the period 1900 to 2016. It shows that shareholder primacy has become a Hartian obligation and a rule of law. The rule does not exist in a single locus duty, but instead is a filamentary principle that weaves through many other rules of corporate law and the architecture of the corporate and market systems. This article shows how the obligation, albeit unenforceable, is efficacious nonetheless.
| Author | : Jonathan Mukwiri |
| Publisher | : |
| Total Pages | : 21 |
| Release | : 2014 |
| Genre | : |
| ISBN | : |
Download Myth of Shareholder Primacy in English Law Book in PDF, ePub and Kindle
By virtue of section 172 of the Companies Act 2006, the concept of Enlightened Shareholder Value, which is an extension of Shareholder Primacy norm, is now enshrined into English law as the basis of corporate governance. Prior to the Companies Act 2006, much was written about shareholder primacy, which assumed it to be the basis of corporate governance in English law. But what has rarely been discussed is the validity of that assumption. Was shareholder primacy a legal norm in English law prior to the Companies Act 2006? Did the case law that are purported to have supported shareholder primacy really support it? In testing the validity of the shareholder primacy assumption, this article examines its purported legal sources rather than its merits. The ultimate shareholder primacy norm is that directors are agents of shareholders, and that directors are under fundamental obligation to run the company in the interest of the shareholders. This article finds that directors owed no such legal obligation to shareholders, that the confusion was based on the historical application of partnership principles to company law, and that a contextual reading of case law reveals that the theory would have been at odds with the elementary tenet of corporate legal personality. This article also finds that although shareholder primacy norm has since been enshrined in the Companies Act 2006, albeit as Enlightened Shareholder Value, it remains at odds with the legal personality tenet and provides a right without corresponding legal remedy.
| Author | : Beate Sjåfjell |
| Publisher | : |
| Total Pages | : 15 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
Download Dismantling the Legal Myth of Shareholder Primacy Book in PDF, ePub and Kindle
The convergence of crises that we face as a global society, with its grand challenge of how to achieve social progress for all without destroying the very basis of our existence, emphasises the importance of discussing the role of the market actors. We cannot achieve environmental, social and economic sustainability of our societies without the contribution of the market actors (businesses, investors, consumers and the public sector in its many roles as market actor). With many difficult questions ahead, there is one thing we know for sure: the 'business as usual' path market actors in aggregate are on is not an option for sustainability; it is a very certain path towards a very uncertain future. A fundamental transition away from 'business as usual' and onto a sustainable path is necessary. Such a fundamental transition requires sustainable market actors. The paper focuses on what this means for business and more specifically, for the dominant business form of the corporation. In a time where social entrepreneurship in various shapes and sizes receives much (and undoubtedly warranted) attention, whether and how the dominant business form of the corporation fits into a sustainable future also needs to be discussed. This can be rephrased as a question of how to achieve corporate sustainability. The paper begins by discussing the role of the corporation in the unsustainable 'business as usual', based on the results of the Sustainable Companies Project (Section II), which shows that the main barrier to corporate sustainability is the social norm of shareholder primacy. This norm has become so dominant that it has turned into a legal myth, and corporate sustainability requires a dismantling of this myth. Section III presents a summary of the tentative reform proposal with this aim, while Section IV concludes with reflections on the work that needs to be done, where the mitigation of the legal myth of shareholder primacy is placed in the broader context of the ongoing research project Sustainable Market Actors for Responsible Trade (SMART).
| Author | : David G. Yosifon |
| Publisher | : |
| Total Pages | : 48 |
| Release | : 2019 |
| Genre | : |
| ISBN | : |
Download Opting Out of Shareholder Primacy Book in PDF, ePub and Kindle
The central command of corporate governance law is that directors must serve the shareholder interest. Directors may not sacrifice shareholder value in favor of other stakeholders or values. In this Article, I examine whether this rule is mandatory, or merely a default rule which can be altered through private ordering. I argue that Delaware's corporate law, the most important corporate law in the United States, should be understood to have long-permitted deviation from shareholder primacy by charter specification. This conclusion, however, is at least complicated by the recent legislative creation of the Public Benefit Corporation (PBC). The PBC is a new form of business organization that explicitly charges directors with balancing the interests of shareholders and non-shareholders in corporate operations. The PBC innovation may lead judges to conclude that if corporate promoters want to deviate from shareholder primacy, they must do so by using the Public Benefit Corporation. The organizational and governance requirements of the PBC are highly particular, and most of its important features are mandatory. Thus, the Public Benefit Corporation may inadvertently have narrowed flexibility in the creation of corporations that alter the shareholder primacy norm, rather than expanded it, as the PBC's proponents and many commentators have presumed.A more desirable interpretation, however, is that private-ordering of corporate beneficiary is still permitted under the Delaware General Corporation Law, and that the PBC is merely one alternative structure - a non-exclusive “menu option” - which promoters seeking alternatives to shareholder wealth maximization may find convenient to use. I urge judges to adopt this second interpretation, and I urge Delaware lawmakers to clarify their intentions to avoid jurists adopting the view that the PBC is the exclusive path to multi-stakeholder governance.
