Limited Liability, Shareholder Rights and Corporate Irresponsibility
34 Cambridge Journal of Economics (2010), 837-856
23 Pages Posted: 28 May 2012
Date Written: 2007
There is has long been a tendency to see the corporate legal form as presently constituted as economically determined, as the more or less inevitable product of the demands of advanced technology and economic efficiency. Through an examination of its historical emergence, focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality, this paper takes issue with this view, arguing that the corporate legal form was, and is, in large part a political construct developed to accommodate and protect the rentier investor. It is, moreover, a construct which institutionalizes irresponsibility. Against this backdrop, different ways of trying to resolve the problem of corporate irresponsibility are explored. The key, the paper suggests, is to be found in decoupling the privilege of limited liability from rights of control.
Keywords: corporate irresponsibility, renter investment, company law, separate personality
JEL Classification: B00, B15, B25
Suggested Citation: Suggested Citation