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Negotiating the Minefields of Corporate Vote-Buying

  • Luh Luh Lan
  • Loizos Heracleous

    (Warwick Business School and Associate Fellow of Templeton College Oxford)

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    Corporate vote-buying has received significant attention in the last decade, in several legal cases that illustrate the fine line between legitimate use of vote harnessing as a useful corporate strategic tool on one hand, and its negative connotations as a potential instrument of fraud that attempts to disfranchise shareholders on the other hand. After a brief outline of the legal history of corporate vote-buying and the rationale for the courts' vigilance on this practice, in both the United States and the United Kingdom, we outline some strategic reasons for vote-buying that might make it a useful option in certain circumstances. Lastly we discuss key principles that a board of directors should bear in mind when engaging in corporate vote-buying, so that it can employ the practice productively and legitimately, keeping in mind shareholders' best interests and avoiding potentially costly and destructive legal challenges. Copyright (c) 2007 The Authors; Journal compilation (c) 2007 Blackwell Publishing Ltd.

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    Article provided by Wiley Blackwell in its journal Corporate Governance: An International Review.

    Volume (Year): 15 (2007)
    Issue (Month): 5 (09)
    Pages: 969-978

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    Handle: RePEc:bla:corgov:v:15:y:2007:i:5:p:969-978
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