Harvard Law School Forum on Corporate Governance
Abstract: The idea that corporations should be managed primarily in the best interest of shareholders has long had its critics. However, the practical relevance of that debate has remained limited for decades. As long as shareholders retain the right to select corporate managers, corporations will ultimately be managed in their interest. Moreover, there is little reason to believe that the commitment to shareholder wealth maximization has weakened. On the contrary, over the last decades, the rise of institutional investors and legal reforms such as say-on-pay or proxy-access have arguably increased shareholders’ power over corporations.