5. Shareholders above the law

1 Weir v Secretary of State for Transport, example referenced in Paddy Ireland, ‘Limited liability, shareholder rights and the problem of corporate irresponsibility’, Cambridge Journal of Economics, 2010, Vol. 34, No. 5, 837–56.

2 Paddy Ireland, ‘Limited liability’.

3 Daniel A. Crane, ‘The Dissociation of Incorporation and Regulation in the Progressive Era and the New Deal’, in Naomi R. Lamoreaux and William J. Novak (eds), Corporations and American Democracy, Harvard University Press, 2017, pp. 109‒38.

4 Robert N. Anthony, ‘The Trouble with Profit Maximization’, Harvard Business Review, 1960, November-December, cited in Jeffrey N. Gordon, ‘The Rise of Independent Directors in the United States, 1950‒2005: Of Shareholder Value and Stock Market Prices’, Stanford Law Review, 2007, Vol. 59, 1465‒1511.

5 Raymond C. Baumhart, ‘How Ethical Are Businessmen?’, Harvard Business Review, 1961, July-August, cited in Jeffrey N. Gordon, ‘The Rise of Independent Directors’.

6 Colin Mayer, ‘Reinventing the Corporation’, Journal of the British Academy, 2016, Vol. 4, 53‒72.

7 Steve Denning, ‘The Origin Of “ The World’s Dumbest Idea ”: Milton Friedman’, Forbes, 26 June 2013.

8 Transcript of Record, Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919) (No. 47) Cross-examination of Ford, at pages 213‒30, cited in Linda Kawaguchi, ‘Introduction to Dodge v. Ford Motor Co.: Primary Source and Commentary Material’, Chapman Law Review, 2014, Vol. 17, No. 2, 493‒578.

9 Dodge v. Ford Motor Co., 170 N.W. 668 (Mich. 1919).

10 See Robert J. Rhee, ‘A Legal Theory of Shareholder Primacy’, Minnesota Law Review, 2018, Vol. 102, 1951‒2017.

11 eBay Domestic Holdings Inc. v. Newmark, 16 A.3d 1 (2010).

12 Harries v. The Church Commissioners for England [1992] 1 WLR 1241.

13 Section 172 of the Companies Act 2006.

14 Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014).

15 Andrew R. Keay, ‘The Public Enforcement of Directors’ Duties’, Working Paper, University of Leeds, School of Law, 16 January 2013.

16 See Robert J. Rhee, ‘A Legal Theory of Shareholder Primacy’.

17 Lord Eldon LC in Carlen v. Drury (1812) 1 Vesey & Beames 154 at 158.

18 In Short v. Treasury Commissioners, 1948, the Court of Appeal stated that ‘shareholders are not, in the eyes of the law, part owners of the company’.

19 Robert Monks, ‘Corporate Governance: Past, Present, & Future’, Harvard Law School Forum on Corporate Governance & Financial Regulation, posted on 4 March 2010.

20 Lynn A. Stout, ‘The Shareholder Value Myth’, European Financial Review, 30 April 2013.

21John Kay, ‘Shareholders think they own the company – they are wrong’, Financial Times, 10 November 2015.

22 Colin Mayer, ‘Reinventing the Corporation’.

23 William Lazonick, ‘The Functions of the Stock Market and the Fallacies of Shareholder Value’, Institute for New Economic Thinking, Working Paper Series No. 58, June 2017. See also Andrew G. Haldane, ‘Who Owns A Company?’, speech at the University of Edinburgh Corporate Finance Conference, 22 May 2015.

24 William Lazonick, ‘The Functions of the Stock Market’.

25 For more on these ‘agency costs’ see Michael C. Jensen and William H. Meckling, ‘Theory of the Firm: Managerial Behavior, agency costs and ownership structure’, Journal of Financial Economics, 1976, Vol. 3, No. 4, 305‒60.

26 Lynn A. Stout, ‘The Shareholder Value Myth’.

27 Antony Page and Robert A. Katz, ‘Freezing out Ben & Jerry: Corporate Law and the Sale of a Social Enterprise Icon’, Vermont Law Review, 2012, Vol. 35, 211‒50.

28 Antony Page and Robert A. Katz, ‘Freezing out Ben & Jerry’.

29 Richard Dawkins, The Selfish Gene, Oxford University Press, 1976.

30 Ramsi Woodcock, ‘The Antitrust Case for Consumer Primacy in Corporate Governance’, UC Irvine Law Review, 2019, Vol. 10, forthcoming.

31 Leo E. Strine, ‘The Dangers of Denial: The Need for a Clear-Eyed Understanding of the Power and Accountability Structure Established by the Delaware General Corporation Law’, Wake Forest Law Review, 2015, Vol. 50, 761‒71.

32 Edwin S. Rockefeller, The Antitrust Religion, Cato Institute, 2007.

33 Paul Krugman, ‘Who Was Milton Friedman?’, New York Review of Books, 15 February 2007.