Academic

Palmiter on Public Corporation as Private Constitution

By Lawrence Solum

Alan R. Palmiter (Wake Forest University - School of Law) has posted Public Corporation as Private Constitution on SSRN. Here is the abstract:

The large publicly-traded corporation in the United States derives its essential structure and metaphoric language from the republican form of government laid out in the US Constitution. Public shareholders elect a decision-making body that formulates and supervises an executive bureaucracy, subject to review by a judiciary (typically, in Delaware) that balances shareholder interests and management prerogatives. The analogy to the republican government structure found in the federal Constitution and replicated in all 50 states is unavoidable. Both "specialized hierarchies" create a principal-agent model of separated powers that contains similar sets of voting rights, nearly identical standards of judicial review, and generally parallel recognition of exit opportunities. Thus, an understanding of US corporate governance inevitably compels an understanding and appreciation of the structures of US political governance. Metaphorically, the public corporation is private constitution.

This made me curious about Palmiter's possible reaction to an element of our constitutional regime (constitution in the wide sense that goes beyond the text) that is not shared by corporations--the party system.  Parties make elections to legislatures and Congress competitive; elections to Corporate boards are noncompetitive (or so I dimly recall) in the sense that the nominees of the Board almost always will be elected by the shareholders.  I'm not really going anywhere with this--just thinking out loud (or out "bloud").

Full post as published by Legal Theory Blog on April 03, 2008 (boomark / email).