Snapchat's Gift: Equity Culture in High-Tech Firms

48 Pages Posted: 22 Jun 2018 Last revised: 20 Apr 2021

See all articles by Amy Westbrook

Amy Westbrook

Washburn University School of Law

David A. Westbrook

University at Buffalo Law School

Date Written: June 20, 2018


Snap, Inc., the company that owns the platform Snapchat, controbersially offered nonvoting common shares to the public in 2017. This Article asks what it means to invest in Snap or other (mostly technology-based) companies in which common shareholders collectibely have little or no power to influence corporate policy. In particular, why do such investors expect to be compensated? This Article explores the familiar rationales for equity investing, including stock appreciation and dividends, and the logical shortcomings of those rationales in these circumstances. Adopting Henry Manne's "two systems" approach to corporate affairs through both law and economics, we show that corporation law fails to ensure that corporations return business profits to shareholders. A similar analysis of the market for corporate control concludes that, without shareholder boting, the market for corporate control also fails to ensure a return to shareholders.

Shareholders who invest in firms in the absence of legal or market mechanisms to secure a return on their inbestment, howeber, are not irrational. Instead, inbestors rely on cultural understandings of appropriate reciprocity. This Article employs Marcel Mauss's cultural anthropology classic, The Gift, to explain the equity culture in which shareholders invest in Snap and other high-technology firms, and in which such firms operate. This Article concludes by suggesting some ramifications of understanding shareholding, and consequently management, in terms of equity culture.

This Article also complements the substantial work of behabioral economics in explaining inbestor choice and organizational behabiors. The field of corporate finance traditionally has been organized around the figure of the rationally self-interested indibidual. Behabioral economics argues that people are not as rational as orthodox corporate finance assumes. This Article argues that people in markets are not as individual as corporate finance assumes.

Suggested Citation

Westbrook, Amy and Westbrook, David A., Snapchat's Gift: Equity Culture in High-Tech Firms (June 20, 2018). Florida State University Law Review, Vol. 46, No. 4, 2019, Available at SSRN: or

Amy Westbrook

Washburn University School of Law ( email )

1700 College Avenue
Topeka, KS 66621
United States

David A. Westbrook (Contact Author)

University at Buffalo Law School ( email )

School of Law
528 O'Brian Hall
Buffalo, NY 14260-1100
United States

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