08 March 2010

Bainbridge Does Fantasy Law

Professor Bainbridge on Corporations: "shareholders do not own the corporation."

Nice theory, if you are a CEO. Bad law. Ownership of corporate shares is collectively ownership of the corporation. The corporation as a nexus of contracts is a nice theory, but simply isn't the law and isn't even a very realistic description of how corporations work.

There are large, contract based entities, like Franchise, that bind together little firms. But, a firm and a contract are different economic realities.

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