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3 - Preference Aggregation in Corporations

Published online by Cambridge University Press:  18 February 2021

Grant M. Hayden  and
Matthew T. Bodie
Grant M. Hayden
Affiliation:
Southern Methodist University Dedman School of Law
Matthew T. Bodie
Affiliation:
Saint Louis University School of Law
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Summary

This chapter lays out the some of the basic aspects of how corporations identify and aggregate the preferences of their constituents. Unlike democratic political institutions, corporations restrict voting rights to one class of constituents – shareholders – when it comes to electing members of the board or authorizing major transactions. The remaining constituents – employees, creditors, customers, and suppliers – are limited to expressing their preferences through contracts with the corporation. The chapter concludes by exploring this corporate governance structure through three controversial issues – the system of one share, one vote; proxy access; and say on pay – to illustrate the fierce debates within corporate law as well as the creative possibilities permitted by the corporate form.

Keywords

corporate votingshareholder votingcorporate governanceone share one voteproxy accesssay on pay
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Chapter
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Reconstructing the Corporation
From Shareholder Primacy to Shared Governance
 , pp. 30 - 49
Publisher: Cambridge University Press
Print publication year: 2021

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