Shareholder Primacy in Corporate Law: Can it Survive? Should it Survive?

54 Pages Posted: 10 Nov 2009 Last revised: 8 Jan 2010

See all articles by Andrew R. Keay

Andrew R. Keay

University of Leeds - School of Law

Date Written: November 1, 2009


The dominant theory in Anglo-American jurisdictions as far as determining the objective of large public companies, has been, and still appears to be, the shareholder primacy theory. Nevertheless, it would seem that in the past 20 years the stakeholder theory has become increasingly popular in many Anglo-American jurisdictions. Some scholars point to the advent of enlightened shareholder value in corporate legislation in the UK as an indication that the UK might be moving to a more stakeholder approach to the management of companies. Other scholars have noted that financial innovation in the commercial world means that shareholder primacy is problematic, and still others point out that contracts drafted by creditors of the company frequently restrict the implementation of shareholder primacy. With this in mind, this paper seeks to deal with two questions. First, can shareholder primacy survive under various challenges? Second, should it survive in any event? The paper seeks to address those questions by analysing the arguments supporting shareholder primacy and assessing whether these arguments are strong enough and provide sufficient justification for the theory to withstand the present and future challenges to it. The analysis is undertaken not only from a legal perspective, but also from finance, economics, ethics and organisational behaviour perspectives.

Keywords: Companies, shareholder primacy, corporate governance, corporate law

JEL Classification: G3, K22, L21

Suggested Citation

Keay, Andrew R., Shareholder Primacy in Corporate Law: Can it Survive? Should it Survive? (November 1, 2009). Available at SSRN: or

Andrew R. Keay (Contact Author)

University of Leeds - School of Law ( email )

Corporate and Commercial Law
Leeds LS2 9JT
United Kingdom
0113-343-6389 (Phone)

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