Shareholder Empowerment: An Introduction

Recent trends in shareholder empowerment have spurred a heated debate about whether empowered shareholders will ultimately cure corporate ills or adversely affect corporate fortunes. Publicly traded corporations are uniquely positioned to facilitate financial risk bearing, due to their dispersed ownership and liquidity and shareholders’ ability to diversify their financial risk (Easterbrook & Fischel, 1985). They have not only served as “the main engine of economic progress” in the twentieth century (Jensen, 1989: 61), but have also driven social progress by facilitating professionalism, upward mobility, and meritocracy, as well as by providing job stability, and retirement and health care benefits (Davis, 2011, 2013; Demsetz, 1983). The United States “owed everything to the corporation,” writes Beatty (2001), tracing the very development of democracy in the United States to the morphing of early settler companies into a commonwealth. Yet views on corporations have polarized from “the basis of the prosperity of the West and the best hope for the future of the rest of the world” (Micklethwait & Wooldridge, 2003) to the critical query, “are corporations evil?” (Litowitz, 2003).