In this volume, leading management experts offer critical insights into the promises and illusions of shareholder empowerment, the discrepancies between theory and practice, and the challenges posed by variations in global corporate governance regimes.

In this volume, leading management experts offer critical insights into the promises and illusions of shareholder empowerment, the discrepancies between theory and practice, and the challenges posed by variations in global corporate governance regimes.

There is currently an exciting debate underway regarding the way in which power should be allocated in the modern public corporation. A special edition of the Harvard Law Review in April 2006 was devoted to this debate.The current debate is the result of recent proposals, both by the US Securities amp; Exchange Commission as well as by corporate governance commentators, to increase shareholder power. The ironic thing about this debate, but which so far has not been addressed, is the degree of unity regarding the value of shareholder participation. Both sides (which I categorise for convenience as 'shareholder primacists' and 'director primacists') believe that the participatory rights of shareholders should be increased if this would improve corporate performance. Accordingly, there is no place for increased shareholder power if it does not strengthen the bottom line, even if shareholder empowerment is no threat to the authority of the directors, and may provide non-financial benefits to the shareholders.This article disputes this commonly held view regarding the value of shareholder participation in the corporation. It will be argued that shareholder participation is not simply a means to an end but rather an end in itself. A fresh look at shareholder power with the assistance of empirical research in the emerging areas of happiness studies and 'psycho-economics', suggests that shareholders would enjoy greater, longer-lasting happiness by using their shares to have a participatory role in the corporation. It seems that active participation, rather than conventional passivity, may in fact be the 'rational choice'. Accordingly, with the support of this emerging research, it is argued that there is a strong case for increasing shareholder power.

Why are shareholder empowerment and activism such controversial issues in the United States today? Other common law jurisdictions, including the United Kingdom, have welcomed and encouraged greater shareholder participation and engagement in corporate governance. In the United States, however, this prospect has been met with widespread apprehension and resistance. There is a paradox here. The United States is generally regarded as the birthplace of shareholder activism, yet U.S. shareholders have traditionally possessed far fewer corporate governance rights than shareholders in other common law jurisdictions, where such rights are often guaranteed by mandatory laws. U.S. corporate law has been much more focused on protecting shareholders than enabling shareholders to participate in corporate governance, and thereby protect themselves. This article discusses the trajectory of corporate governance in the United States, with particular attention to the regulatory distinction between shareholder protection versus participation in corporate governance. In doing so, it highlights evolving shareholder governance rights in the United States against the backdrop of the shareholder empowerment and proxy access debates. The article also investigates recent U.S. developments, including the growing use by institutional investors of private ordering as a “self-help” mechanism to gain stronger participatory rights. These developments, including controversial bylaw amendments, have readjusted the balance of power between shareholders and boards of directors in U.S. public corporations. They have also created a dynamic and shifting corporate governance terrain, where boards and shareholders are increasingly engaged in “private ordering combat.” The article also explores the intriguing underlying question of why shareholder empowerment and participation in corporate governance are such fraught issues in the United States, compared to some other common law jurisdictions, such as the United Kingdom. To explain this puzzle, the article looks to legal history and to the fundamentally different organizational origins of US and UK corporate law. Organizational origins matter, and divergence in those origins, combined with the phenomenon of "origins backlash", can lead to fundamental differences in the structure of legal regimes. The article argues that this insight is critical to understanding why shareholder empowerment and participation in corporate governance are, and are likely to remain, such contentious issues in the United States compared to other common law jurisdictions.

Corporate governance and shareholder empowerment: hearing before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises of the Committee on Financial Services, U.S. House of Representatives, One Hundred Eleventh Congress, second session, April 21, 2010.

How can shareholders play a more active role in the corporation? Which institutional arrangements can awaken this sleeping giant and channel its power in a beneficial direction? This dissertation explores three delegation arrangements which are of particular interest from a shareholder empowerment perspective: the board of directors, pension funds, and corporate vote buying. The book argues that - in order to be truly effective - the delegation of monitoring and voting power should generally be made subject to a competitive process. Two of the three arrangements - competitive director elections and the free choice of pension funds - hold promise of leading to an actual empowerment of shareholders, while the third arrangement - corporate vote buying - appears to disempower rather than empower them. Dissertation.