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Unpublished Paper
Who’s Afraid of Shareholder Power? A Comparative Law Perspective
ExpressO (2009)
  • Jennifer Hill, Vanderbilt University
Abstract
Who's Afraid of Shareholder Power? A Comparative Law Perspective JENNIFER G. HILL University of Sydney – Faculty of Law; Visiting Professor, Vanderbilt University – School of Law; Research Associate – European Corporate Governance Institute (ECGI) Abstract Shareholder power is back on the regulatory agenda. Although shareholders have traditionally had restricted participatory rights under US corporate law, this paradigm has been challenged in recent times. The shareholder empowerment debate and the Paulson Committee report both raise shareholder power as a serious subject for corporate law reform. Yet, in spite of calls for stronger shareholder rights, there has been great resistance to adjusting the traditional balance of power between shareholders and the board of directors in the US. The current credit crisis has highlighted some of the dangers of untrammelled managerial power and under-regulation. The crisis represents an opportunity to reassess whether US shareholders should be afforded stronger power, as a check on managerial control. This article critically analyzes key arguments and insights of the US shareholder empowerment debate through a comparative corporate governance lens. There is often an implicit assumption in anti-shareholder empowerment arguments that shareholders possess identical legal rights across the common law world. The article challenges this widely held tenet, showing that US shareholders have unusually restricted rights compared to their counterparts in other common law jurisdictions, such as the UK and Australia. Finally, the article discusses an interesting tension between legal rules designed to enhance shareholder power, and commercial practices designed to subvert it. This tension demonstrates the importance in comparative corporate governance scholarship of focusing not only on the terms of specific laws, but also on the commercial responses of parties subject to those laws.
Keywords
  • corporate governance,
  • comparative corporate governance,
  • “law matters” hypothesis,
  • shareholders,
  • shareholder empowerment,
  • institutional investors,
  • directors,
  • corporate scandals,
  • regulation,
  • legal rules,
  • commercial practice,
  • charter amendment,
  • shareholder meetings,
  • appointment of directors,
  • removal of directors,
  • corporate prenuptial agreements,
  • entrenchment mechanisms
Disciplines
Publication Date
February 24, 2009
Citation Information
Jennifer Hill. "Who’s Afraid of Shareholder Power? A Comparative Law Perspective" ExpressO (2009)
Available at: http://works.bepress.com/jennifer_hill/3/