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1 results

  • 3 - Preference Aggregation in Corporations

  • Grant M. Hayden, Matthew T. Bodie
  • Book:
    Reconstructing the Corporation
    Published online:
    18 February 2021
    Print publication:
    11 March 2021, pp 30-49

  • 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.