As a writer, it's always nice to find evidence that people are paying attention. Over at VC, Jonathan Adler posted links to Lucian Bebchuk's op-ed supporting proxy access and my blog post in reply.
In the comments, jellis58 wrote that:
I belive Prof Bainbridge’s position is that shareholders do not really “own” the corporation. A corporation is a “nexus of contract;” a set of standard form contracts provided by the state for the parties convenience. In this pre-set contractual arrangement, sharholders decide to give their money and full decision making athority to the board of dirctors for a residual claim on the corporation’s assets and the ability to elect the directors. Any attempt to give shareholders more than that is to give them more than they bargained for.
Bainbridge belives that a strong insulated board is more valuable to shareholders as a whole in the long run than giving a particluar momentary majority of shareholders the ability to influnence corparate policy is and thinks fiduciary duty law and similiar rules are sufficent to handle the agency costs inherent in delegated decision making. He thinks that shareholders rationally conclude coming into the corpoaration that they are better off in the long run by surrendering full control to a representative board which is why the standard form contracts provided by the state through corporate law should reflect that as the default rule.
Precisely right. It concisely captures the argument that took me 235 pages to make.
