2004/12/24 by Paddy Ireland · 84 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Banking stability, regulation, efficiency #Business #Corporate Finance and Governance #Corporate governance #Corporate law #Corporation #Distribution (mathematics) #Economics #Elite #Finance #Housing, Finance, and Neoliberalism #Law #Law and economics #Market economy #Political economy #Political science #Politics #Power (physics) #Shareholder #Shareholder primacy
paper · doi:10.1111/j.1468-2230.2005.00528.x
published in Modern Law Review 68(1), 49-81 (Wiley)
openalex publication_date 2004/12/24 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
In recent years a growing consensus has emerged in favour of the shareholder-oriented model of the corporation. Increasingly, this model is justified not on the basis of shareholder ownership rights but on efficiency grounds: whoever the immediate and direct beneficiaries of shareholder-orientation, it is argued, it ultimately indirectly benefits everyone by ensuring the maximization of aggregate social wealth. The prevalence of this view has caused the distributional dimensions of corporate governance to be neglected. This paper examines the distribution of share ownership and financial wealth in the US and the UK. Although share ownership has become more widely spread, it argues, it remains very heavily concentrated with the result that shareholder primacy is in reality the primacy of a small privileged elite. After an exploration of the contradictions of working class shareholding and the impact of greater shareholder-orientation on the distribution of wealth, the paper concludes by re-evaluating Hansmann and Kraakman's ‘end of corporate history’ thesis, arguing that recent developments represent a triumph not for efficiency but for the growing power of the shareholder class.