Chapter 4: Questioning the Legitimacy of Shareholder Power
Christophe Clerc INTRODUCTION It appears natural, a priori, that the ultimate power of decision in corporations should fall to the owners of the means of production. The shareholders are the owners; therefore it is they who should decide. This argument, which appears to be common sense, is the foundation of a school of thought in favour of increasing the power of shareholders in listed companies – the ‘shareholder primacy’ movement. This movement has enjoyed several notable successes: it has obtained the modification of representations,1 of behaviours2 and of the legal framework.3 At an international level, this has resulted in a convergence of regulations towards the objectives it has defined.4 Many people oppose this movement, raising the fundamental question of the legitimacy of shareholder power: what justifies the pre-eminent position that shareholders have been given in the institutional architecture of corporations? I propose to examine this question in the context of commercial companies listed on the stock exchange, whose features make them an object of analysis in their own right. The question of power in corporations has gained further importance from the fact that corporations have established themselves over the last two centuries as the principal institution5 in the economic sphere and, more generally, as one of the most important institutions in the modern world,6 alongside the state. By considering that profit should be the sole objective of corporations, one places them in a structurally conflict-provoking situation, where the law is a constraint that they must constantly seek to evade.7...
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