Dent, George

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Case Western Reserve University School of Law

Case Western Reserve Law ReviewVolume 55 | Issue 32005The Gorge A. Leet Business Law Symposium:Corporate Governance: Directors vs.Shareholders? - IntroductionGeorge DentFollow this and additional works at: https://scholarlycommons.law.case.edu/caselrevPart of the Law CommonsThis Symposium is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law ScholarlyCommons. It has been accepted for inclusion in Case Western Reserve Law Review by an authorized administrator of Case Western Reserve UniversitySchool of Law Scholarly Commons.Recommended CitationGeorge Dent, The Gorge A. Leet Business Law Symposium: Corporate Governance: Directors vs. Shareholders? - Introduction, 55 Case W.Res. L. Rev. 525 (2005)Available at: https://scholarlycommons.law.case.edu/caselrev/vol55/iss3/4THE GEORGE A. LEET BusINEssLAW SYMPOSIUM:CORPORATE GOVERNANCE:DIRECTORS VS. SHAREHOLDERS?INTRODUCTIONThe history of the corporate governance debate began with thepublication of The Modem Corporation and Private Property' in1932. It announced to a surprised public the notion of separation ofownership and control; that is, the idea that the shareholders who, in ageneral sense, own the corporation do not actually control it. In eco-nomic theory, the directors are the agents, and the executives meresubagents, of the shareholders. In fact, however, the executives, themanagers, and the officers are the ones who really run the businessand often do so to some extent for their own benefit rather than forthe benefit of the shareholders.Enthusiasm for reform since then has waxed and waned. Not sur-prisingly in the 1990s, with the stock market soaring and everybodymaking money, nobody pushed for fundamental changes in corporategovernance. Then at the turn of the millennium we were hit by anumber of corporate scandals-Enron, Tyco, et cetera.One disturbing aspect of those scandals was the absence of theboards of directors. Also disturbing was that by their compositionand practices, these boards did not seem to be defective. In manyrespects they seemed to be at least average, if not above averageboards of directors, yet they did not detect the scandals brewingwithin their own companies.Now the tide has shifted; there is a lot of agitation for reform. Wehave seen a number of changes as a result of that enthusiasm, theI ADOLF AUGUSTUS BERLE, THE MODERN CORPORATION AND PRIVATE PROPERTY(1932).525CASE WESTERN RESERVE LAW REVIEWmost notable being the Sarbanes-Oxley Act of 20022 and changes tothe listing requirements of the New York Stock Exchange and theNASDAQ. We also see some initiatives in the Securities and Ex-change Commission, most notably the proposal for Rule 14a-l 1,3which would enhance the role of shareholders in the nomination andelection of directors. This symposium, therefore, occurs at an oppor-tune time to discuss corporate governance.GEORGE DENTt2 Pub. L. No. 107-204, 116 Stat. 745 (2002).3 Proposed Rule: Security Holder Director Nominations, Exchange Act Release No. 34-48626 (Oct. 14, 2003), 68 Fed. Reg. 60, 784 (Oct. 23, 2003), available athttp://www.sec.gov.rules/proposed/34-48626.htm (last visited June 9, 2005).Schott-van der Eynden Professor of Business Organizations Law, Case Western Re-serve University School of Law.[Vol. 55:3

The Gorge A. Leet Business Law Symposium: Corporate Governance: Directors vs. Shareholders? - Introduction

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The Gorge A. Leet Business Law Symposium: Corporate Governance: Directors vs. Shareholders? - Introduction

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