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Corporate IrresponsibilityAmerica`s Newest Export$
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Lawrence E. Mitchell

Print publication date: 2001

Print ISBN-13: 9780300090239

Published to Yale Scholarship Online: October 2013

DOI: 10.12987/yale/9780300090239.001.0001

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Abandoning the Stockholders

Abandoning the Stockholders

Chapter:
(p.185) Chapter 8 Abandoning the Stockholders
Source:
Corporate Irresponsibility
Author(s):

Lawrence E. Mitchell

Publisher:
Yale University Press
DOI:10.12987/yale/9780300090239.003.0009

This chapter argues that the key to unlocking long-term value in American corporations and to ensuring a governance and ownership structure which will provide for sustainable corporate productivity and profitability is to break the bonds that tie managers to stockholders. It is also necessary to create incentives to keep stockholders invested in the long-term rather than as short-term speculators. The basic operating premise of American corporate law is that stockholders invest their money and in so doing cede control over the future of their investments to corporate management. The chapter reveals that in addition to the federal antifraud and insider trading laws, state corporation laws are full of rules coming under the general rubric of fiduciary duty that are designed to ensure that managers serve the corporation's interests and not their own.

Keywords:   ownership structure, corporate productivity, profitability, stockholders, speculators, corporate management

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