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Publications
  • July–August 2012
  • Article
  • Harvard Business Review

What Good Are Shareholders?

By: Justin Fox and Jay W. Lorsch
  • Format:Print
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Abstract

The article looks at the role outside shareholders play in corporate governance in the U.S., and the relationship between companies' shareholders and managers, as of 2012. It recounts the shift beginning in the 1970s toward shareholders claiming an increasing amount of power relative to corporate managers. The authors argue that shareholders have not benefited much from the trend. They suggest that shareholders as a category are not well positioned to guide corporate decisions or to discipline management. They also discuss problems in two other roles shareholders play with respect to corporations, as a source of funds and as aggregators of information about corporations by way of their decisions to buy or sell stock.

Keywords

Shareholder Activism; Business and Shareholder Relations; Investment Activism; Corporate Governance; Decision Making; Managerial Roles; United States

Citation

Fox, Justin, and Jay W. Lorsch. "What Good Are Shareholders?" R1207B. Harvard Business Review 90, nos. 7-8 (July–August 2012): 49–57.
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About The Author

Jay W. Lorsch

→More Publications

More from the Authors

    • March 2018
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    A Nonprofit Board in Transition at Farrington Nature Linc

    By: Jay Lorsch and Emily Irving
    • June 2017 (Revised October 2017)
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    Uber in 2017: One Bumpy Ride

    By: Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher
    • Annals of Corporate Governance

    Understanding Boards of Directors: A Systems Perspective

    By: Jay W. Lorsch
More from the Authors
  • A Nonprofit Board in Transition at Farrington Nature Linc By: Jay Lorsch and Emily Irving
  • Uber in 2017: One Bumpy Ride By: Suraj Srinivasan, Jay W. Lorsch and Quinn Pitcher
  • Understanding Boards of Directors: A Systems Perspective By: Jay W. Lorsch
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