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The Case for Limited Shareholder Voting Rights

Stephen M. Bainbridge

University of California, Los Angeles (UCLA) - School of Law

August 2005

UCLA School of Law, Law-Econ Research Paper No. 05-15

Recent years have seen a number of efforts to extend the shareholder franchise. These efforts implicate two fundamental issues for corporation law. First, why do shareholders - and only shareholders - have voting rights? Second, why are the voting rights of shareholders so limited? This essay proposes answers for those questions.

As for efforts to expand the limited shareholder voting rights currently provided by corporation law, the essay argues that the director primacy-based system of U.S. corporate governance has served investors and society well. This record of success occurred not in spite of the separation of ownership and control, but because of that separation. Before making further changes to the system of corporate law that has worked well for generations, it would be appropriate to give those changes already made time to work their way through the system. To the extent additional change or reform is thought desirable at this point, surely it should be in the nature of minor modifications to the newly adopted rules designed to enhance their performance, or rather than radical and unprecedented shifts in the system of corporate governance that has existed for decades.

Number of Pages in PDF File: 37

Keywords: corporate governance, corporation law, shareholders, voting rights

JEL Classification: K22

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Date posted: August 11, 2005  

Suggested Citation

Bainbridge, Stephen M., The Case for Limited Shareholder Voting Rights (August 2005). UCLA School of Law, Law-Econ Research Paper No. 05-15. Available at SSRN: https://ssrn.com/abstract=781429 or http://dx.doi.org/10.2139/ssrn.781429

Contact Information

Stephen Mark Bainbridge (Contact Author)
University of California, Los Angeles (UCLA) - School of Law ( email )
385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
310-206-1599 (Phone)
310-825-6023 (Fax)
HOME PAGE: http://www.professorbainbridge.com
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