Edited by Jennifer G. Hill and Randall S. Thomas
Chapter 3: Images of the shareholder – shareholder power and shareholder powerlessness
Image matters, in life and in corporate law. Shareholders are not homogenous (Anabtawi 2006, 564–5, 577ff.; Strine 2006, 1765–6), and they have been portrayed in different ways across time and jurisdictions. Competing images include the shareholder as (dispossessed) owner/principal; beneficiary; bystander; participant in a political entity; investor; or gatekeeper (Hill 2000; Schon 2000). The global financial crisis added a new layer of ambiguity, with shareholders alternatively viewed as victims or collaborators in the crisis. Images of the shareholder lie across a continuum in terms of power. The concepts of ‘power’ generally, and ‘shareholder power’ in particular, are complex, thorny and difficult to define (Moore 2013, 17–18; Wells 2015). It is possible, for example, to describe particular shareholders, such as institutional investors or hedge funds, as inherently ‘powerful’. Shareholders may also possess power collectively and can influence not only corporate controllers (Wells 2015) but also lawmakers (Davies 2015). Finally, context is crucial. Shareholder power issues play out in profoundly different ways, depending on whether corporate ownership structures are dispersed or concentrated (Hopt 2009). This chapter examines how varying conceptions of the shareholder in terms of power and financial sophistication can lead to fundamental doctrinal and regulatory divergence. A dichotomy exists in this regard between shareholder protection and participation rights. Some images envisage shareholders as a vulnerable and powerless group, in need of legal protection.
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