Thursday, November 6, 2014

Wells's "Long View of Shareholder Power"

Harwell Wells, Temple University James E. Beasley School of Law, has posted A Long View of Shareholder Power: From the Antebellum Corporation to the Twenty-First Century, which is forthcoming in Florida Law Review 67 (2015).  Here is the abstract:   
For most of the twentieth century the conventional wisdom held — probably correctly — that shareholders in America’s large corporations were passive and powerless and that real power in a public corporation was wielded by its managers. Beginning in the 1980s, however, shareholders in the form of institutional investors started to push for a greater say in corporate decision-making. In the twenty-first century, hedge funds have upped the ante, fighting for major changes in corporations whose shares they own. Once-imperial CEOs have now become embattled, as they fight, but often lose, against activist shareholders demanding policy changes, new dividends, board representation, and even the sale or break-up of corporations. In short, things have changed. This Article situates the present-day rise of shareholder power by taking a long view over the previous two centuries, moving beyond traditional accounts to reach all the way back to the beginnings of the American business corporation in the early nineteenth century, then following the story of shareholder power up to the present day. This broad view reveals the complicated and shifting nature of shareholder power, documenting how periods of greater shareholder power were interspersed with periods where shareholders had little power, how the focus of shareholder power has moved from controlling shareholders to autonomous managers, and how shareholder power has ebbed and flowed across the last two centuries. It thus not only provides the backstory to present developments, but suggests that what has been seen as a hallmark of American corporate capitalism — the relative powerlessness of shareholders— may only have been typical of a few decades in the middle of the twentieth century.
Here's the contents:
I. Shareholder power in antebellum America
II. Shareholder power in the first gilded age
III. The twentieth century shareholder and the separation of ownership and control
IV. The will to (shareholder) power in the managerial era
      A.  The 1950s and the gadflies
      B.  The 1960s and social issues investing
V. End of the century: institutional investors and the new shareholder activism
      A. The 1950s and the gadflies
      B. The 1960s and social issues investing
Update: the published version is here.