The Case for Limited Shareholder Voting Rights

37 Pages Posted: 11 Aug 2005

See all articles by Stephen M. Bainbridge

Stephen M. Bainbridge

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

Multiple version iconThere are 2 versions of this paper

Date Written: August 2005


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.

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

JEL Classification: K22

Suggested Citation

Bainbridge, Stephen Mark, The Case for Limited Shareholder Voting Rights (August 2005). UCLA School of Law, Law-Econ Research Paper No. 05-15, Available at SSRN: or

Stephen Mark Bainbridge (Contact Author)

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

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