Public Corporation as Private Constitution

14 Pages Posted: 24 Mar 2008

See all articles by Alan R. Palmiter

Alan R. Palmiter

Wake Forest University - School of Law

Multiple version iconThere are 2 versions of this paper

Date Written: March 17, 2008


The large publicly-traded corporation in the United States derives its essential structure and metaphoric language from the republican form of government laid out in the US Constitution. Public shareholders elect a decision-making body that formulates and supervises an executive bureaucracy, subject to review by a judiciary (typically, in Delaware) that balances shareholder interests and management prerogatives. The analogy to the republican government structure found in the federal Constitution and replicated in all 50 states is unavoidable. Both "specialized hierarchies" create a principal-agent model of separated powers that contains similar sets of voting rights, nearly identical standards of judicial review, and generally parallel recognition of exit opportunities. Thus, an understanding of US corporate governance inevitably compels an understanding and appreciation of the structures of US political governance. Metaphorically, the public corporation is private constitution.

Keywords: public corporation, organization theory, judicial review, voting rights, exit rights

JEL Classification: B29, G30, K22, L20,

Suggested Citation

Palmiter, Alan R., Public Corporation as Private Constitution (March 17, 2008). Wake Forest Univ. Legal Studies Paper No. 1111773, Available at SSRN: or

Alan R. Palmiter (Contact Author)

Wake Forest University - School of Law ( email )

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