Abstract
This Article challenges the claim of shareholder primacists that reapportioning corporate governance power away from boards of directors and toward shareholders will benefit shareholders as a class. This claim is premised on the assumptions that shareholders have harmonious interests and that they will pursue those interests by disciplining managers and increasing shareholder value. I argue that the pursuit of common shareholder interests is unlikely to dominate the actions of shareholders. The largest modern shareholders—those most likely to exercise shareholder power—have private interests that are both substantial and in conflict with maximizing overall shareholder value. As a result, it is misleading to assume that increasing shareholder power will benefit shareholders generally. Instead, it is more plausible that shareholders will use any incremental power conferred on them to benefit their private interests at the expense of the firm and other shareholders. I contend that this concern poses a sufficient threat to shareholder wealth to warrant caution before implementing corporate governance reforms that would increase shareholder power.
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