Shareholder Voting and the Bundling Problem in Corporate Law

Posted: 13 Aug 2003

Multiple version iconThere are 2 versions of this paper

Date Written: December 2003


In this paper, I consider the characteristics, limits and promise of shareholder voting as one of many mechanisms that have evolved to constrain deviance by directors from the maximization of shareholder wealth. Finding the existing menu of control mechanisms imperfect, Professor Lucian Bebchuk and other corporate reformers have suggested an increased power in shareholders to intervene in corporate decisions traditionally reserved to the board of directors. The reformers' primary argument is that, under present law, directors can bundle decisions on unrelated actions, for instance a decision on payment of dividends with a decision on management's continued service, thereby limiting the effectiveness of shareholder voting as a control mechanism. I show that this bundling problem is illusory, offer an alternative explanation of the ineffectiveness of shareholder voting and demonstrate that this alternative explanation undercuts the reformers' policy prescription. I conclude that an increased power of shareholder intervention is unlikely to benefit shareholders.

Please see Accepted Paper version at

Keywords: Corporation, corporate law, corporate governance, shareholder, voting, bundling, board, directors, shareholder wealth maximization, empowering shareholders, SEC

JEL Classification: D20,D23,D70,D71,G10,G30,G31,G32,G34,G38,K22

Suggested Citation

Camara, Kiwi Alejandro Danao, Shareholder Voting and the Bundling Problem in Corporate Law (December 2003). Available at SSRN: or

Kiwi Alejandro Danao Camara (Contact Author)

Camara & Sibley LLP ( email )

2800 Post Oak Blvd., Ste. 5220
Houston, TX 77056
United States
7139666789 (Phone)
7135831131 (Fax)


Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics