Shareholder Initiative: A Social Choice and Game Theoretic Approach to Corporate Law

42 Pages Posted: 23 Jan 2008  

Jeffrey N. Gordon

Columbia Law School; European Corporate Governance Institute (ECGI)

Abstract

By longstanding practice, shareholders of large public corporations have delegated almost all decision rights over business matters to the board of directors. Given current calls for shareholder empowerment, it is worth revisiting the basis for the existing practice, as reflected in this 1991 paper. Among other things, we see that this absolute delegation rule minimizes potential pathologies in shareholder voting, including possibilities for opportunistic side-dealings and destructive voting cycles. These risks must be addressed lest shareholder empowerment merely replace one set of problems with another.

Suggested Citation

Gordon, Jeffrey N., Shareholder Initiative: A Social Choice and Game Theoretic Approach to Corporate Law. University of Cincinnati Law Review, Vol. 60, p. 347, 1991; Columbia Law and Economics Working Paper No. 324. Available at SSRN: https://ssrn.com/abstract=1086453

Jeffrey N. Gordon (Contact Author)

Columbia Law School ( email )

435 West 116th Street
Ctr. for Law and Economic Studies
New York, NY 10027
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212-854-2316 (Phone)
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European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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