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Full-Text Articles in Law
The Essential Unity Of Shareholders And The Myth Of Investor Short-Termism, George W. Dent
The Essential Unity Of Shareholders And The Myth Of Investor Short-Termism, George W. Dent
Faculty Publications
The separation of ownership and control publicized by Berle and Means in 1932 persists today. Domination of public companies by self-serving and ineffective executives costs America billions of dollars every year and contributed to the current economic meltdown. Repeated efforts to solve this problem--including the Sarbanes-Oxley Act, expanded disclosure duties, and more stringent requirements for director independence--have had little benefit and have sometimes made matters worse. The flaws in our corporate governance system are a growing problem for America’s economy as disillusioned investors increasingly place their capital in other countries.
Nonetheless, proposals for greater shareholder power have encountered criticisms: various …
Academics In Wonderland: The Team Production And Director Primacy Models Of Corporate Governance, George W. Dent
Academics In Wonderland: The Team Production And Director Primacy Models Of Corporate Governance, George W. Dent
Faculty Publications
This paper examines the Team Production and Director Primacy Models of corporate governance, finds them wanting, and explains why corporate governance is moving toward shareholder primacy and why this will benefit not only investors but the whole American economy.
The director primacy model posits that shareholders are so ill-informed and so divided in their interests that they would self-destruct if they controlled the firm. Accordingly they tie their own hands by ceding control to a board of independent directors. Advocates of the team production theory often agree with the foregoing but stress the importance to the firm of other constituencies, …