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Do shareholders really own the firm?


  • Tristan Boyer

    () (Luxembourg School of Finance, University of Luxembourg)


The object of this contribution is to address the question of the ownership of the firm. Both law and economics shape representations of the world: law focuses on " rules and justice; economics focuses on efficiency and allocation. They describe" " common situations and ""objects'' such as firms and their functioning, both with" positive (analytical) and normative perspectives. However, their descriptions and remedies for the issues which they tackle are very different due to the differences in their philosophical and sociological goals. The Law & Economics perspective can be described as the use of the economics theoretical framework upon issues of law. In this perspective, law issues are addressed as any other economic phenomenon through the prism of efficiency. From this perspective, law is contingent upon normative conditions of economic theory and the best solution arises after a standard process of optimisation. This paper will set out a reversal of that epistemological position: instead of using economic representations to improve the state of law, representations of law will be aimed at testing and improving the economic analytical framework. Since corporate governance issues are structured by domestic laws as well as by economic regulations, legal representations will be discussed in light of economic corporate governance analysis.

Suggested Citation

  • Tristan Boyer, 2007. "Do shareholders really own the firm?," LSF Research Working Paper Series 07-05, Luxembourg School of Finance, University of Luxembourg.
  • Handle: RePEc:crf:wpaper:07-05

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    References listed on IDEAS

    1. Boyer, Tristan, 2002. "Gouvernement d'entreprise et d├ęcisions d'emploi
      [Corporate Governance and employment decisions]
      ," MPRA Paper 10287, University Library of Munich, Germany.
    2. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
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    More about this item


    corporate governance; agency theory; law & economics; property rights; stakeholder approach.;

    JEL classification:

    • K0 - Law and Economics - - General
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects


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