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Shareholder Democracy: A Reality or Chimera?
Schwartz, Donald E.
25/3  (Spring 1983): 53-67

The article focuses on shareholder democracy. Champions of shareholder participatory rights cling to the idea that shareholder democracy limits the power of managers. Managers, for their part, uphold the democratic process as the basis of their power, dismissing claims that power has become unhinged from ownership. Public confidence that a democratic system functions in corporations, that managers who exercise substantial power over lives, are responsive to a governance process may be misplaced, and this misplaced confidence becomes significant as the political activities and rights of a corporation grow. Inquiries into corporate governance, in almost every instance, begin with a concern for the welfare of shareholders. Whatever may be the legitimate interests of other stakeholders, analysts recognize the importance of shareholder interests for several reasons: the need to attract equity investors in a capitalist economy, the need to maintain management's focus and discipline on a fixed object, and the enormous difficulties of devising an alternative within the system.
 

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