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December 2, 2013|

The Future of Shareholder Wealth Maximization

by George A. Mocsary|

Right on its 20-year schedule,[1] the old debate over the proper purpose of the corporation has recently been revivified in books, articles, and blog posts in as dire a tone as ever. The spectacular corporate failures on the part of firms like Enron, Lehman Brothers, and the quasi-governmental Fannie Mae, accompanied by equally spectacular government bailouts of failed firms, have fueled the recent uproar. A sense that someone has somehow wronged the rest of us characterizes the zeitgeist of the post-bailout era. It is textbook law that a corporation’s board of directors must act in good faith to maximize for its…

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Responses

For Shareholder Wealth Maximization, Against Corporate Purpose

by Alexei M. Marcoux

In “The Future of Shareholder Wealth Maximization,” George Mocsary undertakes two important tasks. The first is to establish that, notwithstanding claims to the contrary advanced by some corporate law scholars,[1] the shareholder wealth maximization norm is and remains a bedrock principle of corporate law. The second is to establish that, on broadly libertarian grounds, the…

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Why the Corporation Is Not Merely a Nexus of Contracts: A Response to Alexei Marcoux

by George A. Mocsary

Professor Marcoux’s thoughtful reply to my essay serves as an important reminder that a corporation may accurately be described as a nexus of contracts. Notwithstanding its significant descriptive power, it is a framework that tends to be criticized along with agency theory and the Shareholder Wealth Maximization norm with which it is closely associated.[1] Marcoux…

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The Future of Shareholder Wealth Maximization: A Response to George Mocsary

by Cynthia Williams

In “The Future of Shareholder Wealth Maximization,” Prof. George Mocsary examines two questions: Does corporate law require a corporation’s board of directors to act to maximize shareholder wealth in order to fulfill its fiduciary duties; and if yes (as Prof. Mocsary interprets the cases), should it continue to do so? In this Response, I argue…

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Shareholder Wealth Maximization: A Response to Cynthia Williams

by George A. Mocsary

Prof. Cynthia Williams raises some of the standard arguments against the shareholder wealth maximization norm. Most of her arguments are addressed in my original essay,[1] and restating what is written there would not add to the conversation. On other points, which can be boiled down to problems with short-termism in its myriad manifestations, we obviously…

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June 18, 2012|Coasean Theory of the Firm, Corporate Governance, Dodd-Frank, Sarbanes-Oxley, Shareholder Theory, Stakeholder Theory

Reclaiming the Narrative of Liberty in Corporate Governance

by Nicholas Capaldi|

In this book Stephen Bainbridge addresses the changes introduced into corporate governance law by both Sarbanes Oxley (the Public Company Accounting Reform and Investor Protection Act of 2002 – SOX) and Dodd Frank (the Wall Street Reform and Consumer Protection Act of 2010). These two public policies serve as temporal bookends to the contemporary era of financial crisis. Sarbanes Oxley was a response to the Enron accounting scandal as well as corporate malfeasance at World Com, Global Crossing, etc.; while Dodd-Frank was a response to the financial crisis created by the securitization of mortgages. With regard to these two public policies,…

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Book Reviews

A Mirror of the 20th-Century Congress

by Joseph Postell

Wright undermined the very basis of his local popularity—the decentralized nature of the House—by supporting reforms that gave power to the party leaders.

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The Graces of Flannery O'Connor

by Henry T. Edmondson III

O'Connor's correspondence is a goldmine of piercing insight and startling reflections on everything from literature to philosophy to raising peacocks.

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Liberty Classics

Rereading Politica in the Post-Liberal Moment

by Glenn A. Moots

Althusius offers a rich constitutionalism that empowers persons to thrive alongside one another in deliberate communities.

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James Fenimore Cooper and the American Experiment

by Melissa Matthes

In The American Democrat, James Fenimore Cooper defended democracy against both mob rule and majority tyranny.

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Podcasts

Stuck With Decadence

A discussion with Ross Douthat

Ross Douthat discusses with Richard Reinsch his new book The Decadent Society.

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Can the Postmodern Natural Law Remedy Our Failing Humanism?

A discussion with Graham McAleer

Graham McAleer discusses how postmodern natural law can help us think more coherently about human beings and our actions.

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Did the Civil Rights Constitution Distort American Politics?

A discussion with Christopher Caldwell

Christopher Caldwell discusses his new book, The Age of Entitlement.

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America, Land of Deformed Institutions

A discussion with Yuval Levin

Yuval Levin pinpoints that American alienation and anger emerges from our weak political, social, and religious institutions.

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The opinions expressed on Law & Liberty are solely those of the contributors to the site and do not reflect the opinions of Liberty Fund.
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