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Limited liability, shareholder rights and the problem of corporate irresponsibility

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  • Paddy Ireland

Abstract

There has long been a tendency to see the corporate legal form as presently constituted as economically determined, as the more or less inevitable product of the demands of advanced technology and economic efficiency. Through an examination of its historical emergence, focusing in particular on the introduction of general limited liability and the development of the modern doctrine of separate corporate personality, this paper takes issue with this view, arguing that the corporate legal form was, and is, in large part a political construct developed to accommodate and protect the rentier investor. It is, moreover, a construct which institutionalises irresponsibility. Against this backdrop different ways of trying to resolve the problem of corporate irresponsibility are explored. The key, the paper suggests, is to be found in decoupling the privilege of limited liability from rights of control. Copyright The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

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  • Paddy Ireland, 2010. "Limited liability, shareholder rights and the problem of corporate irresponsibility," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 34(5), pages 837-856.
    • Handle: RePEc:oup:cambje:v:34:y:2010:i:5:p:837-856
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    File URL: http://hdl.handle.net/10.1093/cje/ben040
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    Cited by:

    1. Jo, Tae-Hee & Henry, John F., 2013. "Take the Money and Run: The Business Enterprise in the Age of Money Manager Capitalism," MPRA Paper 48782, University Library of Munich, Germany.
    2. Tae-Hee Jo & John F. Henry, 2015. "The Business Enterprise in the Age of Money Manager Capitalism," Journal of Economic Issues, Taylor & Francis Journals, vol. 49(1), pages 23-46, January.
    3. Blanche Segrestin & Andrew Johnston & Armand Hatchuel, 2019. "The Separation Of Directors And Managers: A Historical Examination Of The Status Of Managers," Post-Print hal-01957329, HAL.
    4. Veldman, Jeroen, 2019. "Inequality, Inc," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 63(C).
    5. Shuangge Wen & Jingchen Zhao, 2020. "The Commons, the Common Good and Extraterritoriality: Seeking Sustainable Global Justice through Corporate Responsibility," Sustainability, MDPI, vol. 12(22), pages 1-21, November.
    6. María Iborra & Marta Riera, 2023. "Corporate social irresponsibility: What we know and what we need to know," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(3), pages 1421-1439, May.
    7. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Journal of Business Ethics, Springer, vol. 171(1), pages 1-13, June.
    8. ATM Adnan & Hilda Tandigalla, 2017. "The Dramatic Shift In Emphasis From A Shareholder-Dominated Approach To A Stakeholder-Oriented Corporate Governance Model," European Journal of Business and Economics, Central Bohemia University, vol. 12(2), pages 11151:12-11, January.
    9. Sikka, Prem & Stittle, John, 2019. "Debunking the myth of shareholder ownership of companies: Some implications for corporate governance and financial reporting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 63(C).
    10. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2020. "When the law distinguishes between the enterprise and the corporation: the case of the new French law on corporate purpose," Post-Print hal-02441287, HAL.
    11. Blanche Segrestin & Armand Hatchuel & Kevin Levillain, 2021. "When the Law Distinguishes Between the Enterprise and the Corporation: The Case of the New French Law on Corporate Purpose," Post-Print hal-02465609, HAL.
    12. Goulding, Richard & Haslam, Colin & Leaver, Adam & Silver, Jonathan, 2024. "A ‘Distributional Apparatus’ for real estate: Fair value accounting and the assetization of UK property," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).
    13. Veldman, Jeroen, 2018. "Inequality, Inc," MPRA Paper 86644, University Library of Munich, Germany.
    14. Lin-Hi, Nick & Müller, Karsten, 2013. "The CSR bottom line: Preventing corporate social irresponsibility," Journal of Business Research, Elsevier, vol. 66(10), pages 1928-1936.
    15. Catherine Casey, 2016. "Labour's interest in corporate governance in the UK: are workers on the board back on the agenda?," Industrial Relations Journal, Wiley Blackwell, vol. 47(1), pages 46-61, January.
    16. Eleanor Burt & Samuel Mansell, 2019. "Moral Agency in Charities and Business Corporations: Exploring the Constraints of Law and Regulation," Journal of Business Ethics, Springer, vol. 159(1), pages 59-73, September.
    17. Stephanie Blankenburg, 2012. "Limited liability," Chapters, in: Jan Toporowski & Jo Michell (ed.), Handbook of Critical Issues in Finance, chapter 27, pages i-ii, Edward Elgar Publishing.
    18. Lenore Palladino, 2022. "Economic Policies for Innovative Enterprises: Implementing Multi-Stakeholder Corporate Governance," Review of Radical Political Economics, Union for Radical Political Economics, vol. 54(1), pages 5-25, March.
    19. Jo, Tae-Hee, 2013. "Uncertainty, Instability, and the Control of Markets," MPRA Paper 47936, University Library of Munich, Germany.
    20. Salter, Alexander W. & Veetil, Vipin & White, Lawrence H., 2017. "Extended shareholder liability as a means to constrain moral hazard in insured banks," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 153-160.
    21. Ferguson-Cradler, Gregory, 2020. "Ownership in the electricity market: Property, the firm, and the climate crisis," MPIfG Discussion Paper 20/5, Max Planck Institute for the Study of Societies.
    22. David Monciardini & Laura Rocca & Monica Veneziani, 2024. "Virtuous circles: Transformative impact and challenges of the social and solidarity circular economy," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 642-660, February.

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