Reconstructing the Corporation
From Shareholder Primacy to Shared Governance

This book critically examines shareholder primacy and develops a new theory of shared corporate governance that includes employees.

Grant M. Hayden (Author), Matthew T. Bodie (Author)

9781316502914, Cambridge University Press

Paperback / softback, published 11 March 2021

284 pages
22.8 x 15.1 x 1.4 cm, 0.41 kg

'It is a rare pleasure to encounter genuinely fresh thinking about the purpose and function of the corporation. Critiques of existing models are easy to find. Plausible, workable alternatives are not. Hayden and Bodie draw on economic and democratic theory to stitch together just such an alternative, one in which shareholders, employees - and no other stakeholders - are given the strongest voices in corporate governance. Reconstructing the Corporation is provocative, timely, and excellent.' David H. Webber, Professor and Associate Dean, Boston University Law School, and author of The Rise of the Working-Class Shareholder

Modern corporations contribute to a wide range of contemporary problems, including income inequality, global warming, and the influence of money in politics. Their relentless pursuit of profits, though, is the natural outcome of the doctrine of shareholder primacy. As the consensus around this doctrine crumbles, it has become increasingly clear that the prerogatives of corporate governance have been improperly limited to shareholders. It is time to examine shareholder primacy and its attendant governance features anew, and reorient the literature around the basic purpose of corporations. This book critically examines the current state of corporate governance law and provides decisive rebuttals to longstanding arguments for the exclusive shareholder franchise. Reconstructing the Corporation presents a new model of corporate governance - one that builds on the theory of the firm as well as a novel theory of democratic participation - to support the extension of the corporate franchise to employees.

Preface
Acknowledgements
1. Introduction
2. Preference aggregation in political institutions
3. Preference aggregation in corporations
4. The corporation as contract
5. Shareholder homogeneity
6. The argument from the residual
7. The argument from Arrow's theorem
8. The shareholder franchise and board primacy
9. A firm-based approach to corporate voting rights
10. Democratic participation and shared governance
11. The German codetermination experience
12. Conclusion
Notes
Index.

Subject Areas: Company, commercial & competition law [LNC], Corporate governance [KJR]