The Prophets and Profits of Shareholder Primacy Part I: In Search of the Right Side of History (and the Left Side of the Balance Sheet)

Abstract This chapter reviews some of the traditional arguments and authorities supporting the putative ‘shareholder primacy norm’, including its origins and the claims that have been made for its legitimacy as a corporate goal. A number of the old Anglo-American law school ‘war horses’ are discussed here, including Dodge v Ford, Shlensky v Wrigley, AP Smith Mfg Co v Barlow, Hutton v West Cork Railway Co, and Parke v Daily News Ltd. This survey of familiar authorities on the profit-seeking (if not necessarily the profit-maximizing) goal of the corporation is intended to provide a background to the exploration of the development of the ideas of ‘profit’, ‘wealth maximization’, ‘shareholder primacy’, and the nature of the firm that are undertaken in the following chapters.