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The Mythical Benefits Of Shareholder Control, Lynn A. Stout
The Mythical Benefits Of Shareholder Control, Lynn A. Stout
Cornell Law Faculty Publications
In "The Myth of the Shareholder Franchise," Professor Lucian Bebchuk elegantly argues that the notion that shareholders in public corporations have the power to remove directors is a myth. Although a director facing a proxy contest might find this to be a bit of an overstatement, the core idea is sound. In a public company with widely dispersed share ownership, it is difficult and expensive for shareholders to overcome obstacles to collective action and wage a proxy battle to oust an incumbent board. Nor is success likely when directors can use corporate funds to solicit proxies to stay in place. …
The Mythical Benefits Of Shareholder Control, Lynn A. Stout
The Mythical Benefits Of Shareholder Control, Lynn A. Stout
Cornell Law Faculty Publications
In a forthcoming Virginia Law Review article, Professor Lucian Bebchuk argues that the notion that shareholders in public corporations have the power to remove directors is a myth. This is perhaps an overstatement, but Bebchuk is correct to suggest that in a public company with widely dispersed share ownership, it is difficult and expensive for shareholders to overcome obstacles to collective action and wage a proxy battle to oust an incumbent board. Nor is success likely when directors can use corporate funds to solicit proxies to stay in place. The end result, as Adolf Berle and Gardiner Means famously observed …