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CHAPTER 3How Shareholder Primacy Gets Corporate Economics Wrong

The idea of shareholder primacy has gained enormous traction among laymen, journalists, economists, and business leaders. But as we have just seen, American law does not actually mandate shareholder primacy. Many legal experts acknowledge this misfit.49 For example, Hansmann and Kraakman recognized the yawning gap between shareholder value ideology and the actual rules of corporate law in their influential “End of History” essay when they suggested that shareholder value thinking would lead to the eventual “reform” of corporate law, implicitly conceding that the law in its current ...

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