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Law Commons

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Legal Studies

Economics

2006

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Full-Text Articles in Law

Measuring Efficiency In Corporate Law: The Role Of Shareholder Primacy, Jill E. Fisch Apr 2006

Measuring Efficiency In Corporate Law: The Role Of Shareholder Primacy, Jill E. Fisch

Faculty Scholarship at Penn Law

The shareholder primacy norm defines the objective of the corporation as maximization of shareholder wealth. Law and economics scholars have incorporated the shareholder primacy norm into their empirical analyses of regulatory efficiency. An increasingly influential body of scholarship uses empirical methodology to evaluate legal rules that allocate power within the corporation. By embracing the shareholder primacy norm, empirical scholars offer normative assessments about regulatory choices based on the effect of legal rules on measures of shareholder value such as stock price, net profits, and Tobin’s Q.

This Article challenges the foundations of using the shareholder primacy norm to judge ...