Making the Corporation Safe for Shareholder Democracy

56 Pages Posted: 13 Oct 2012

See all articles by Lisa M. Fairfax

Lisa M. Fairfax

University of Pennsylvania Law School - Institute for Law & Economics

Date Written: 2008


This article considers the effect that increased shareholder activism may have on non-shareholder corporate stakeholders such as employees and consumers. One of the most outspoken proponents of increased shareholder power has argued that such increased power could have negative repercussions for other corporate stakeholders because it would force directors to focus on profits without regard to other interests. This article critically examines that argument. The article acknowledges that increased shareholder power may benefit some stakeholders more than others, and may have some negative consequences. However, this article demonstrates that shareholders not only have interests that align with other stakeholders, but also introduces empirical evidence suggesting that shareholders may use their increased power to advance the interests of other stakeholders. Thus, this article debunks the notion that increased shareholder power is necessarily problematic for non-shareholder stakeholders.

Keywords: shareholders, voting power, corporate governance, stakeholders

JEL Classification: K22, G30, D72

Suggested Citation

Fairfax, Lisa M., Making the Corporation Safe for Shareholder Democracy (2008). Ohio State Law Journal, Vol. 69, No. 53-107, 2008, GWU Legal Studies Research Paper No. 2012-91, GWU Law School Public Law Research Paper No. 2012-91, Available at SSRN:

Lisa M. Fairfax (Contact Author)

University of Pennsylvania Law School - Institute for Law & Economics ( email )

3501 Sansom Street
University of Pennsylvania Carey School of Law
Philadelphia, PA 19104
United States
215-746-2243 (Phone)
215-573-2025 (Fax)

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