Shareholder Primacy and the Distribution of Wealth

Abstract

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 of corporations but on the basis of efficiency. Moreover, it is argued that no matter who are the immediate beneficiaries of shareholder primacy, everyone ultimately benefits indirectly because of the impact of greater efficiency on aggregate social wealth. This paper argues that this has led to neglect of the distirbution of share and other financial property ownership. Although share ownership has indeed spread, it argues, it is still heavily concentrated in the hands of a small privileged elite.

Keywords: shareholder primacy, wealth distribution, end of corporate history

JEL Classification: B00, B15, B25