5Corporate Law
Introduction
Arthur Levitt, Jr., former Chairman of the Securities Exchange Commission, asserted, “The principle that shareholders own the companies in which they invest—and are the ultimate bosses of those running them—is central to modern capitalism” (Levitt, 2008). This echoes Friedman's (1970) well-known declaration that, “In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires.” Unfortunately, neither Levitt's nor Friedman's proclamation that shareowners own corporations have any basis in corporate law.
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