Law Commons^™

Shareholder Wealth Maximization As Means To An End, Robert P. Bartlett, Iii

Robert Bartlett

In several recent cases, the Delaware Chancery Court has emphasized that where a conflict of interest exists between holders of a company’s common stock and holders of its preferred stock, the standard of conduct for directors requires that they strive to maximize the value of the corporation for the benefit of its common stockholders rather than for its preferred stockholders. This article interrogates this view of directors’ fiduciary duties from the perspective of incomplete contracting theory. Building on the seminal work of Sanford Grossman and Oliver Hart, incomplete contracting theory examines the critical role of corporate control rights for addressing …

Commitment And Entrenchment In Corporate Governance, K.J. Martijn Cremers, Saura Masconale, Simone M. Sepe

Northwestern University Law Review

Over the past twenty years, a growing number of empirical studies have provided evidence that governance arrangements protecting incumbents from removal promote managerial entrenchment, reducing firm value. As a result of these studies, “good” corporate governance is widely understood today as being about stronger shareholder rights.

This Article rebuts this view, presenting new empirical evidence that challenges the results of prior studies and developing a novel theoretical account of what really matters in corporate governance. Employing a unique dataset that spans from 1978 to 2008, we document that protective arrangements that require shareholder approval—such as staggered boards and supermajority requirements …

What's Driving Acquisitions? An In-Depth Analysis Of Ceo Drivers Determining Modern Form Acquisition Strategy, Jennifer E. Wuebker

University of Richmond Law Review

Part I provides an overview of the acquisition landscape, including

a brief history of the prevalence and success of acquisitions

as well as an analysis of acquisitions today. Part II outlines

the acquisition process and highlights the importance and dynamics

of decision making, both in principle and in practice. Part

III explores two theories of acquisitive strategy driving CEO decision

making: value enhancement and private interest. Part IV

analyzes the implications of CEO personality and psychological

drivers on acquisition strategy and decision making. This article

argues that CEO traits are central decision drivers, but that no

particular set of traits …

Corporations And The 99%: Team Production Revisited, Shlomitt Azgad-Tromer

Fordham Journal of Corporate & Financial Law

This Article explores the legal manifestation of the interaction between the general public and the public corporation. Revisiting team production analysis, this Article redefines the corporate team and argues that while several constituencies indeed form part of the corporate team, others are exogenous to the corporate enterprise. Employees, suppliers and financiers contribute together to the common corporate enterprise, enjoying a long-term relational contract with the corporation, while retail consumers contract with the corporation at arm’s length, and other people living alongside the corporation do not contract with it at all. Under this organizational model, the general public may participate in …

What We Talk About When We Talk About Voting: Efficiency And The Error In Empty Voting, Patricia Beck

Fordham Journal of Corporate & Financial Law

Under the shareholder primacy model, shareholders exercise voting power because their votes are wealth maximizing and efficient. The practice of decoupling, or the strategic separation of the right to vote on a share from the economic ownership of that share, undermines this efficiency. The decoupled investor’s interests are not aligned with maximizing the value of the corporation and decoupled investors have, to the detriment of all other shareholders, used their voting power to dictate inefficient corporate decisions. This Note advocates for proxy card disclosure of decoupled shares and subsequent voiding of the decoupled votes. In this way, only those shares …