84. (C. L. Loss & E. CowETT. supra note 82, at 327-29.85. See CAL. CORP. CODE § 25100(o) (West Supp. 1968).86. An analogous possibility to governmental review is review by an independent non-governmental institution. See, e.g.. Buxbaum, Preferred Stock- Law and Draltsnan.l.hip, 42CALIF. L. REV. 243, 306-09 (1954); Rostow, To Who,, and Jor What Fnds is CorporateManagement Responsible?. in THE CORPORATION IN MODERN SocII-TY. %upra note I. at 57-58.70-71.[Vol. 57: 1
MODERN CORPORATE DECISIONMA KINGpublicly held corporations have no interest in participating incorporate affairs at any level, so that such an approach would be ofonly theoretical import. As Manning puts it:It is clear beyond question that shareholders as a lot have little or noreal concern with ...the "fundamental" transactions. ...It iscommonplace to observe that the modern shareholder is a kind ofinvestor and does not think of himself as or act like an "owner." Hehires his capital out to the managers and they run it for him; howthey do it is their business, not his, and he always votes "yes" on theproxy."Certainly this premise is a widely shared one.8 But to what extent is ittrue?3. Shareholder Expectations(a) The AT&T myth.-ln the absence of any hard data concerningthe expectations of shareholders in- publicly held corporations, thefollowing assumption, which would probably find general acceptance,will be made: The extent to which a shareholder in such a corporationexpects and wants to participate in structural decisions is intimatelyrelated to the size of his holdings. Therefore, one method ofinvestigating the expectations of such shareholders is to explore the sizeof shareholdings in publicly held corporations.In discussing shareholder expectations from this perspective, mostcommentators have taken as their model AT&T or GM.9 In terms ofnumber of record shareholders, at least, these corporations are not verytypical. AT&T has over three million shareholders, and GM over 1.4million."' In contrast, no other corporation seems to have more than750,000 shareholders, and only eight others seem to have more than250,000."' However, the real question as to the typicality of AT&Tand GM is not how many other corporations have a like number ofshareholders, but how many others have a pattern of stockdistribution such that the shareholders will not expect to participate instructural decisions.Unfortunately, there are only a handful of studies relating tointracorporate stock distribution, and even these have generally87. Manning, supra note 34, at 261.88. .See. eg.. Mason. Introduction. Tin: CORPORATION IN MODI-RN SOCIETY..tupra noteI. at 2 ("The equity owner is joining the bond holder as a functionless rentier").89. See. e.g.. Chayes, supra note 30, at 25; Dion, supra note 34, at 611; Hornstein,Corporaie Control and Private Property Ruies. 92 U. PA. L. RIv. I, 3 (1943).