In the familiar Anglo-American model of corporate governance, shareholders have two important rights: the right to ultimate control of a corporation and a right to all its profits. In addition, shareholders are the exclusive beneficiary of the fiduciary duty of management, which is to say that managers have a fiduciary duty to operate a corporation solely in the interest of shareholders. The role of shareholders in corporate governance can also be expressed by saying that maximizing shareholder wealth is and ought to be the objective of a firm.

These features of the shareholder model of corporate governance appear to place shareholders in a privileged position in comparison with employees, suppliers, customers, and other corporate constituencies or stakeholder groups. As a result, this model, which is often ...