Symbolic Corporate Governance Politics

48 Pages Posted: 5 Mar 2014 Last revised: 3 Dec 2014

Marcel Kahan

New York University School of Law; European Corporate Governance Institute

Edward B. Rock

New York University School of Law

Date Written: 2014


How are we to understand the persistent gap between rhetoric and reality that characterizes so much of corporate governance politics? In this Article, we show that the rhetoric around a variety of high profile corporate governance controversies (including shareholder proposals asking boards to redeem poison pills, proxy access, majority voting in director elections, and shareholder proposals to remove supermajority voting requirements) cannot be justified by the material interests at stake. At the same time, shareholder activists are oddly reluctant to pursue issues that may have a more material impact, such as anti-pill charter provisions or mandatory bylaw amendments. We consider a variety of explanations for this phenomenon including “public interest” analyses, “public choice” analyses, and the possibility that corporate governance politics has a substantial “symbolic” or “folkloristic” element. Elaborating on arguments made in Thurman Arnold’s The Folklore of Capitalism, we suggest that there is an analogous “Folklore of Corporate Governance” that serves to reconcile the gap between our idealized view of corporations as controlled by real-life shareholders and the inevitable reality that effective control largely resides in managements and in disembodied institutions. We consider some implications of the explanations we put forward.

Keywords: Corporations, politics, corporate governance controversies, public interest or public choice explanations, corporate control, symbols, myths, Thurman Arnold, legal realism, interdisciplinary scholarship, capitalism, gap between rhetoric and reality, folklore

JEL Classification: G34, K22, P12

Suggested Citation

Kahan, Marcel and Rock, Edward B., Symbolic Corporate Governance Politics (2014). Boston University Law Review, Vol. 94, Pg. 1997, 2014; U of Penn, Inst for Law & Econ Research Paper No. 14-6; NYU Law and Economics Research Paper No. 14-07. Available at SSRN: or

Marcel Kahan

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States
212-998-6268 (Phone)
212-995-4341 (Fax)

European Corporate Governance Institute ( email )

B-1050 Brussels

Edward B. Rock (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

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