- The Cournot Centre series
Edited by Jean-Philippe Touffut
Chapter 4: Questioning the Legitimacy of Shareholder Power
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...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.